Demand for dollars ratcheted up last week after acting finance minister Robinson Githae said he had instructed the central bank to stop the shilling from strengthening beyond the 82 per dollar level, sending the currency down 0.8 percent.

"At the moment investors are waiting for direction from the (central bank) MPC meeting tomorrow after what the (acting) Finance Minister said last week," said John Muli, a trader at African Banking Corporation.

At 0712 GMT, commercial banks quoted the shilling at 83.15/35 against the dollar, barely changed from Friday's close of 83.10/30.

Ranked as one of Africa's most liquid currencies, the shilling sank in the face of high inflation last year, but was rescued by the central bank's raising of domestic interest rates to 18 percent.

Analysts polled by Reuters were split on whether the central bank will take advantage on Tuesday of lower-than-expected inflation in February to launch a cycle of monetary easing.

Policymakers left the rate unchanged in two consecutive meetings this year saying the tightening carried out last year needed more time to combat inflation.