Headlines
Remittance prints $3.42bn for May; governance and revenue flags temper the read.
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
- ◆Brent pass-through into the next CPI print
RISK
- ▼Real policy rate +1.29% thins if 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 board outcome 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% on the Q4 2025 print and CAR at 1.56% leaves the system 844bp short of the 10% floor — a solvency hole only forbearance keeps off the front page. The Islami Bank board meeting that stalled by day and convened at night is that hole surfacing in governance: when a D-SIB (Domestic Systemically Important Bank) cannot seat its board in daylight, 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 the Q1 2026 disclosures, due June, as the only near-term catalyst that can move the call.
FX & External
Anchored at 122.75; May remittance $3.42bn underwrites the FX runway.
External Flow Balance
USD/BDT flat at 122.75; May remittance $3.42bn covers the $2.26bn trade gap, reserves $35.11bn against the $51bn FY27 target.
USD/BDT unmoved since the April band reset; May remittance up from $3.13bn, reserves still on the 1 Apr print.
Treasury: remittance surplus still funds the gap, but the oil bounce to $95.16 is the new drain — watch import-payment timing.
WATCH
- ◆June–July seasonal remittance dip on reserve cover
- ◆Brent pass-through into the post-Eid import-payment lines
- ◆Import cover near 6 months — 5.86 on the Mar print
RISK
- ▼Oil bounce to $95.16 widens the import bill
- ▼EU/US trade rules threaten export-market access
DSE Markets
DSEX breaks out to 5,372 on turnover up to BDT 912cr — breadth firm.
DSEX Index
DSEX +0.69% to 5,372.63 — turnover up to BDT 912cr from 779cr, breadth 179/152; first volume-confirmed session since the post-Eid reopening.
Breaking out from the 31 May post-Eid base of 5,336; turnover above BDT 900cr for the first time since the reopening.
Risk/equity desk: breakout is volume-backed but early — add only if turnover holds above BDT 900cr; watch Brent's $95.16 bounce on consumer counters.
WATCH
- ◆Whether turnover holds above BDT 900cr to confirm the breakout
- ◆Consumer counters against the weak Eid-sales read
- ◆Brent's bounce to $95.16 on cost-sensitive counters
RISK
- ▼Thin post-holiday float can still exaggerate moves
- ▼Oil back at $95.16 pressures consumer-counter margins
The board has done more than hold — it has broken higher. DSEX closed 5,372.63, +0.69%, on turnover that expanded to BDT 912cr from 779cr, with breadth a clean 179/152; for the first session since the post-Eid reopening, the move is volume-confirmed rather than a thin gap-fill. The macro frame supports it: May remittance at $3.42bn keeps USD/BDT pinned at 122.75 and the FX runway open, while the front-end stepped lower — 91d T-Bill 10.15%, 364d 10.50% — easing the discount rate that caps equity multiples. The cross-current is energy: Brent snapped back to $95.16, +$3 on the day, re-loading cost-push onto consumer and transport counters even as the index rises. The desk reads the breakout as real but early — constructive while turnover holds above BDT 900cr, with the weak Eid-sales read and the oil bounce the two checks before adding risk.
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 — 364d off 10.65%, 10y eased 7bp from 10.98%; the spread now 13bp.
ALCO: front-end easing supports roll-down and equity multiples — watch the FY27 budget borrowing pace 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; oil bounce 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: Brent's bounce to $95.16 is a fresh cost-push risk — watch the Apr CPI print before any easing tilt.
WATCH
- ◆Apr 2026 CPI print from BBS for disinflation confirmation
- ◆Oil pass-through into the next CPI read
- ◆Private-credit trajectory — 6.03% YoY is subdued
RISK
- ▼Oil bounce to $95.16 reverses the food-led disinflation
- ▼Non-food above 9% constrains MPC easing flexibility
Remittance
May remittance prints $3.42bn, up from April; June–July dip the watch.
Remittance Inflow
WATCH
- ◆June–July 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 $4,515/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 strength 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 snaps back to $95.16; the import-bill relief reverses, cost-push re-loads.
Brent Crude
Brent back to $95.16, +$3.11 on the day — WTI $92.32; the slide toward $90 has reversed ~$16 below the May $111 peak.
Up from $92.05 yesterday, retracing toward the May $111 peak; the $90 support test is off the table for now.
Treasury: dearer crude re-widens the dollar fuel bill and re-arms cost-push — watch a $100 retest and the next CPI print.
WATCH
- ◆$95 hold or a push back toward $100
- ◆Oil pass-through into the next BBS CPI print
- ◆OPEC+ June production decision
RISK
- ▼Brent's +3.4% bounce widens the import bill
- ▼Renewed supply premium if the ceasefire frays
The oil relief has reversed. Brent closed $95.16, up $3.11 on the day and roughly $16 below the May $111 peak — WTI tracked to $92.32 — erasing part of last week's slide back toward $90. For an energy importer the direction is the signal: every dollar on the barrel widens the dollar fuel bill that drives most of the import-cover drag, last 5.86 months on the Mar print. The timing is the problem. The bounce lands on top of a domestic fuel-oil hike already moving through the basket, so the external and the domestic legs now push CPI the same way — and non-food already runs 9.09%. Disinflation that looked set to hold at a 12m-avg of 8.6% — lowest since Mar 2023 (8.4% then) — gets harder from here. The desk reads oil as the swing risk to both the import bill and the MPC easing path: watch a $100 retest and the next BBS CPI print for confirmation.
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