diff --git a/tests/sh.test b/tests/sh.test
index b301e0ed..27555c7a 100644
--- a/tests/sh.test
+++ b/tests/sh.test
@@ -723,9 +723,12 @@ testing '[[1<2]] is alphabetical, not numeric' '[[ 123 < 19 ]] && echo yes' \
   'yes\n' '' ''
 testing '[[~]]' '[[ ~ == $HOME ]] && echo yes' 'yes\n' '' ''
 
-$BROKEN testing 'quoting contexts nest' \
-        $'echo -n "$(echo "hello $(eval $\'echo -\\\\\\ne \\\'world\\n \\\'\')")"' \
+# The trailing space is because the \n gets stripped off otherwise
+testing 'quoting contexts nest' \
+  $'echo -n "$(echo "hello $(eval $\'echo -\\\\\\ne \\\'world\\n \\\'\')")"' \
   'hello world\n ' '' ''
+testing "\$'' suppresses variable expansion" \
+  $'echo $\'$(abc\'' '$(abc\n' '' ''
 
 testing 'if; is a syntax error but if $EMPTY; is not' \
   'if $NONE; then echo hello; fi' 'hello\n' '' ''
diff --git a/toys/pending/sh.c b/toys/pending/sh.c
index c81056e5..1be952d0 100644
--- a/toys/pending/sh.c
+++ b/toys/pending/sh.c
@@ -1128,7 +1128,7 @@ static char *parse_word(char *start, int early)
           else if (qq==254) return start+1;
           else if (qq==255) toybuf[quote-1] = ')';
         } else if (ii==')') quote--;
-      } else if (ii==qq) quote--;        // matching end quote
+      } else if (ii==(qq&127)) quote--;        // matching end quote
       else if (qq!='\'') end--, ii = 0;  // single quote claims everything
       if (ii) continue;                  // fall through for other quote types
 
@@ -1146,11 +1146,11 @@ static char *parse_word(char *start, int early)
 
     // \? $() ${} $[] ?() *() +() @() !()
     else {
-      if (ii=='$' && -1!=(qq = stridx("({[", *end))) {
+      if (ii=='$' && qq != 0247 && -1!=(qq = stridx("({['", *end))) {
         if (strstart(&end, "((")) {
           end--;
           toybuf[quote++] = 255;
-        } else toybuf[quote++] = ")}]"[qq];
+        } else toybuf[quote++] = ")}]\247"[qq]; // last is '+128
       } else if (*end=='(' && strchr("?*+@!", ii)) toybuf[quote++] = ')';
       else {
         if (ii!='\\') end--;