Headlines
Fuel-oil hike reverses the disinflation tailwind; trade rules and bank unrest flag risk.
The tape's lead is cost, not flow. Fuel-oil rises Tk5/litre even as Brent eased to $92.05 — $19 below the May peak — so the import-price relief stalls at the pump, and the cost-push lands just as disinflation looked to take hold (CPI 12m-avg 8.6%, non-food sticky at 9.09%). The external account faces a parallel squeeze: import policy ruled incompatible with new EU/US trade rules threatens RMG export access, while leather bleeds billions on compliance gaps — competitiveness hits to the export leg the $51bn FY27 reserves build leans on. The Islami Bank unrest is an idiosyncratic but loud reminder that banking-system tail risk stays unresolved with NPLs at 35.73%. The desk reads the day defensive: the FX anchor holds at USD/BDT 122.75, but the disinflation trade and the export story both got harder.
Food's Share of Spending Rises as Income Falls
An IMF chart, built on USDA data, plots food spending as a share of GDP against food's share of total consumer spending. Poorer economies sit further up and further right on both scales.
- ▸Advanced economies hold the bottom-left corner. Food takes roughly 5 to 22 percent of consumer spending in that group, on food outlays worth under about 13 percent of GDP.
- ▸Emerging markets spread across the whole middle of the chart. Their markers run from about 11 percent of consumer spending to above 40 percent, and the group overlaps the advanced cluster at one end and the low-income band at the other.
- ▸Low-income developing countries occupy the top-right. Every marker in that group sits above roughly 29 percent of consumer spending, and the highest of them approach 55 percent.
A household that already spends half its money on food has no cheaper category to move into, so a price rise comes out of everything else it buys. The IMF places Bangladesh in the low-income group at the upper right of this chart. Food and beverages carry the largest single weight in the Bangladesh CPI basket, which is the same fact seen from the other side.
Food inflation belongs in the credit process, not only in the macro commentary. A price move reaches disposable income before it reaches any borrower's file, and the thinnest-buffer books — retail, microfinance-linked exposure, small-ticket SME — feel it first. A risk team reading food prices only off the monthly CPI print is working from the slowest signal available.
Policy & Rates (Bangladesh Bank)
Policy rate holds 10% on the Apr MPS; the reserves print lags.
FX Reserves
WATCH
- ◆Next MPS date and forward rate guidance
- ◆SDF utilisation as the excess-liquidity tell
- ◆Fuel-oil pass-through into the next CPI print
RISK
- ▼Real policy rate at +1.29% thins if fuel-oil lifts CPI
- ▼Reserves print lagging — last refreshed 1 Apr
Banking
NPL frozen at 35.73%, CAR 844bp below floor — Q1 disclosures due June.
WATCH
- ◆Q1 2026 bank-level disclosures — due June
- ◆Islami Bank governance situation and any BB intervention
- ◆Any BB recapitalisation roadmap for state lenders
RISK
- ▼CAR 844bp below floor implies open-ended forbearance
- ▼Islami Bank unrest signals depositor-confidence risk at a D-SIB
The credit cycle here has not turned — it has stopped. NPLs hold 35.73% for a third consecutive quarter on the Q4 2025 print, and CAR at 1.56% leaves the system 844bp short of the 10% floor — a solvency hole that only forbearance keeps off the front page. Today's unrest outside Islami Bank's headquarters is that hole surfacing: when a D-SIB (Domestic Systemically Important Bank) draws a crowd, depositor confidence — not the ratio — becomes the live variable. The fiscal channel compounds it: government bank borrowing past its full-year ceiling at BDT 0.92tn pulls scarce capacity toward the sovereign and away from a private-credit pulse already subdued at 6.03% YoY. The desk holds no fresh state-lender or stressed-private counterparty exposure and treats Q1 2026 disclosures, due June, as the only near-term catalyst that can move the call.
FX & External
Stable at 122.75; EU/US trade rules add an export-competitiveness risk.
External Flow Balance
USD/BDT flat at 122.75; remittance $3.13bn covers the $2.26bn trade gap, reserves $35.1bn against the $51bn FY27 target.
USD/BDT unmoved since the Apr band reset; reserves on the 1 Apr print, exports held pending the May read.
Treasury: export-side risk now leads — EU/US trade-rule incompatibility threatens the RMG market access the reserves build needs.
WATCH
- ◆EU/US trade-rule compliance timeline on the RMG book
- ◆Post-Eid import-payment surge on the import lines
- ◆Import cover near 6 months — 5.86 on the Mar print
RISK
- ▼EU/US trade rules threaten export-market access
- ▼Seasonal Jun–Jul remittance dip could test reserve cover
DSE Markets
DSEX flat at 5,336; turnover steady, breadth still positive at 161/136.
DSEX Index
DSEX flat at 5,335.87, +0.14% — unchanged from the reopening session; turnover BDT 779cr, breadth 161/136.
Holding the post-Eid reopening level of 31 May; the board cleared its gap-open risk last session.
Risk: consolidation, not trend — watch first full-week turnover before adding; fuel-oil cost-push weighs on consumer counters.
WATCH
- ◆First full-week turnover trend for conviction
- ◆Consumer counters against the weak Eid-sales read
- ◆BSEC governance-code implementation timeline
RISK
- ▼Thin post-holiday liquidity can still exaggerate moves
- ▼Fuel-oil cost-push pressures consumer-counter margins
T-Bonds & T-Bills
Front-end at 10.15%; curve near-flat at 10.91%, fiscal pace the risk.
BD Govt Yield Ladder
91d T-Bill 10.15%, 364d 10.50%; curve near-flat through 10y at 10.91%, the 5y–10y spread just 13bp.
Short-end stepped lower since late April; 10y eased 7bp from 10.98%, the 5y–10y spread now 13bp.
ALCO: front-end easing supports roll-down — watch the fiscal borrowing pace into the FY27 budget for reversal risk.
WATCH
- ◆Next auction sizes for the demand signal
- ◆Govt bank-borrowing pace into the FY27 budget
RISK
- ▼Fiscal crowding if borrowing accelerates post-Eid
- ▼Flat curve compresses NIM on ALM (Asset-Liability Management) books
Macro & Inflation
CPI 12m-avg 8.6% on the Mar print; fuel-oil hike now a forward risk.
CPI Trend
CPI 12m-avg eased to 8.6%, food 8.24%, non-food 9.09% — disinflation intact but the non-food leg stays sticky above 9%.
CPI 12m-avg at lowest since Mar 2023 (8.4% then); non-food lowest since Feb 2026 (9.0% then).
MPC: the Tk5/litre fuel-oil hike is a fresh cost-push risk — watch the next CPI print before any easing tilt.
WATCH
- ◆Apr 2026 CPI print from BBS for disinflation confirmation
- ◆Fuel-oil pass-through into the next CPI read
- ◆Private-credit trajectory — 6.03% YoY is subdued
RISK
- ▼Fuel-oil hike reverses the food-led disinflation
- ▼Non-food above 9% constrains MPC easing flexibility
Remittance
Remittance at $3,130mn covers the trade gap; Jun–Jul dip the watch.
Remittance Inflow
WATCH
- ◆Jun–Jul seasonal pattern — pre-Eid inflows now past
- ◆Gulf labour-policy shifts affecting worker headcount
RISK
- ▼Post-Eid seasonal dip typical in Jun–Jul
- ▼Informal-channel share widens if a kerb premium opens
Commodities
Gold $4,560/oz; LNG $15/MMBtu on the Apr print — monsoon the watch.
WATCH
- ◆LNG spot for Jun–Aug monsoon-demand pricing
- ◆Gold as a global risk-sentiment proxy
RISK
- ▼LNG spike on monsoon power demand lifts Petrobangla off-take costs
- ▼Sustained gold rally signals USD weakness and geopolitical hedging
Fiscal
BDT 0.92tn bank borrowing breaches the ceiling; FY27 budget due June.
WATCH
- ◆FY27 budget — expected June 2026
- ◆NBR restructuring and revenue-mobilisation progress
RISK
- ▼Private-credit crowding-out as the sovereign competes for bank funding
- ▼T-Bill rate reversal if borrowing accelerates post-Eid
Iran War & Oil
Brent steady at $92.05; yet fuel-oil rose Tk5/litre — relief stalls at the pump.
Brent Crude
Brent steady at $92.05, holding ~$19 below the May $111 peak — WTI tracking at $87.36.
Flat day-over-day off the $111 May peak; $90 is the next key support, so far untested.
Treasury: cheaper crude eases the dollar fuel bill, but the Tk5/litre domestic hike re-loads cost-push — watch the next CPI print.
WATCH
- ◆$90 Brent support — the next technical test
- ◆Domestic fuel-price pass-through into CPI
- ◆OPEC+ June production decision
RISK
- ▼Domestic fuel-oil hike offsets the Brent-driven import relief
- ▼Supply shock or ceasefire breakdown could reverse the slide fast
The oil read splits in two directions at once. Brent holds $92.05 — flat on the session and some $19 below the May $111 peak — and that lower global print is unambiguous relief for an energy-importer's external account, trimming the fuel bill that drives most of the import-cover drag, last at 5.86 months on the Mar print. But the relief stopped at the border: domestic fuel-oil rose Tk5/litre, a fiscal pass-through that recovers BPC margin while re-loading cost-push into a basket where non-food already runs 9.09%. The two moves offset — cheaper crude eases the dollar bill, dearer diesel lifts the taka cost of transport and production. The net is a wash on the external account but a negative on the inflation path: watch a $90 Brent break for an import-cover rerating, and the next BBS CPI print for the pass-through that complicates any MPC easing tilt.
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