Headlines
Budget week leads; subsidy bill swells as the BSEC board resigns.
Budget week sets the tape, and every front-page line bends the same way — the sovereign's funding pull is widening, not closing. The FY27 statement lands this week with Iran-war subsidy demand swollen to Tk1.20tn while the planned wealth tax and money-whitening window are dropped, trading revenue for signalling just as May exports fall 7%. The financing gap already sits on the banks: government borrowing has run to BDT 1.25tn, past its full-year ceiling with a quarter of FY26 left, drawn from a system still carrying a 32.26% NPL ratio. Two side-channels sharpen the read — the full BSEC board resigns mid-rally, a governance vacuum over the bourse, and a dollar at a 2-month high on Gulf hostilities tightens import-payment timing. The desk treats the budget print as the binding catalyst and holds defensive on rate-sensitive paper into it.
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; easing room thin.
FX Reserves
WATCH
- ◆Next MPS date and forward rate guidance
- ◆SDF utilisation as the excess-liquidity tell
- ◆FY27 budget borrowing pace on the curve
RISK
- ▼Real policy rate +1.29% thins if the power-tariff hike lifts CPI
- ▼Reserves print lagging — last refreshed 1 Apr
Banking
NPL eases to 32.26% on the Q1 print; CAR hole unchanged.
WATCH
- ◆Q1 2026 CAR disclosure to confirm the capital gap
- ◆Whether the NPL decline holds or reflects reclassification
- ◆Any BB recapitalisation roadmap for state lenders
RISK
- ▼CAR 844bp below floor implies open-ended forbearance
- ▼Iran-war subsidy pull and Brent at $97.09 squeeze corporate debt-service
The credit-cycle flow has turned, but the stock has not. On the Q1 2026 print the NPL ratio eases to 32.26% — down 347bp from the 35.73% that held for quarters, the first material decline in the series. Read it with discipline: CAR still reads 1.56% on the Sep 2025 print, 844bp below the 10% floor — a solvency hole only forbearance keeps off the front page. A lower NPL with an unchanged capital base is improvement in flow, not resilience. The sovereign pulls the other way: government bank borrowing has run to BDT 1.25tn, past its full-year ceiling, drawing capacity toward the deficit and away from private credit already subdued at 6.03% YoY. The desk holds no fresh state-lender exposure and treats the Q1 CAR disclosure as the catalyst that confirms whether the lower ratio is real repair or reclassification.
FX & External
Anchored at 122.75; May exports slip 7% as the dollar firms.
External Flow Balance
USD/BDT flat at 122.75; remittance $3.13bn covers the $2.26bn trade gap, but May exports slipped to $3.12bn, down 7%.
USD/BDT unmoved since the April band reset; reserves on the 4 Jun read, exports the fresh May print.
Treasury: remittance still funds the gap, but exports -7% and a 2-month-high dollar are fresh drains — watch import-payment timing.
WATCH
- ◆IMF programme size and conditionality timeline
- ◆June–July seasonal remittance dip on reserve cover
- ◆Dollar strength and Gulf risk into import-payment timing
RISK
- ▼May exports -7% narrows the surplus cushion
- ▼Brent at $97.09 and the power-tariff hike widen the import bill
The external account still funds itself, but the margin is thinning into budget week. USD/BDT holds the managed 122.75, and remittance at $3.13bn still covers the $2.26bn trade gap with room to underwrite reserves at $35.11bn. The pressure is on the earning side: May exports slipped to $3.12bn, a 7% fall that stalls the rebound just as the FY27 budget lands. Layer in a dollar at a 2-month high on Gulf hostilities and Brent firm at $97.09, and the bill the surplus must absorb is widening from both price and FX. The IMF clearing a fresh programme adds a reserve backstop, but conditionality is unpriced. Treasury holds the anchor as credible near-term — import cover 5.86 months — but the desk watches the June–July seasonal remittance dip against a heavier import-payment calendar; that is where the cushion gets tested.
DSE Markets
DSEX holds 5,441 on BDT 1,279cr turnover; breadth 243/98.
DSEX Index
DSEX holds 5,441.66, +0.66% — turnover BDT 1,279cr keeps breadth at 243/98; the post-Eid breakout consolidates on volume.
Holds the 31 May post-Eid base of 5,336; turnover above BDT 900cr for a third session.
Risk/equity desk: volume still confirms the base, but a BSEC leadership vacuum is a fresh overhang — hold, watch consumer counters.
WATCH
- ◆Whether turnover holds above BDT 900cr to confirm the base
- ◆BSEC leadership vacuum and any regulatory pause
- ◆Consumer counters against the confirmed power-tariff hike
RISK
- ▼BSEC board resignation injects regulatory uncertainty mid-rally
- ▼Brent at $97.09 and the tariff hike pressure 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 — 91d off 10.17%, 364d off 10.65%; the curve flat for a fifth read.
ALCO: front-end easing supports roll-down — watch the FY27 budget borrowing pace, now BDT 1.25tn, for reversal risk.
WATCH
- ◆Next auction sizes for the demand signal
- ◆Govt bank-borrowing pace into the FY27 budget
RISK
- ▼Fiscal crowding as borrowing runs to BDT 1.25tn
- ▼Flat curve compresses margins on ALM (Asset-Liability Management) books
Macro & Inflation
CPI 12m-avg 8.6% on the Mar print; power-tariff hike 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: a confirmed power-tariff hike and Brent at $97.09 are cost-push risks — watch the Apr CPI print before any easing tilt.
WATCH
- ◆Apr 2026 CPI print from BBS for disinflation confirmation
- ◆Power-tariff and oil pass-through into the next read
- ◆Private-credit trajectory — 6.03% YoY is subdued
RISK
- ▼Power-tariff hike and Brent at $97.09 reverse food-led disinflation
- ▼Non-food above 9% constrains MPC easing flexibility
Remittance
Remittance holds $3.13bn, covering the trade gap; seasonal dip the watch.
Remittance Inflow
WATCH
- ◆June–July seasonal pattern — pre-Eid inflows now past
- ◆May print confirmation from BB
- ◆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 on dollar strength
Commodities
Gold eases to $4,474/oz; LNG $15/MMBtu — monsoon demand the watch.
WATCH
- ◆LNG spot for Jun–Aug monsoon-demand pricing
- ◆Gold as a global risk-sentiment proxy against a firmer dollar
RISK
- ▼LNG spike on monsoon power demand lifts Petrobangla off-take costs
- ▼Gold weakness signals risk-on rotation, a firmer dollar
Fiscal
Govt bank borrowing past ceiling at BDT 1.25tn; subsidy bill swells.
WATCH
- ◆FY27 budget — due this week
- ◆NBR collection pace against the full-year target
- ◆IMF programme conditionality on the deficit path
RISK
- ▼Private-credit crowding-out as the sovereign competes for bank funding
- ▼Borrowing past ceiling pressures the T-Bill curve into FY27
The sovereign's funding pull has stepped up into budget week, and the bill is growing on both sides. Government bank borrowing has run to BDT 1.25tn — past its full-year ceiling with a quarter of FY26 to go, a BDT 0.33tn jump from the BDT 0.92tn that already breached the cap. NBR collection has climbed to BDT 3.27tn but still trails, so the gap keeps landing on bank balance sheets. The spending side widens too: Iran-war subsidy demand has swelled to Tk1.20tn for FY27 while the planned wealth tax is dropped — revenue traded for signalling. That is the credit-cycle link: every taka the state pulls from a system carrying a 32.26% NPL ratio and CAR 844bp below floor is a taka not extended to private credit, already subdued at 6.03% YoY. The desk reads the FY27 budget, due this week, as the binding catalyst — watch the deficit-financing mix.
Iran War & Oil
Brent holds $97.09; Gulf hostilities re-arm the cost-push channel.
Brent Crude
Brent holds $97.09, WTI $95.30 — firm in the mid-$90s, ~$14 below the May $111 peak as Gulf hostilities flare.
Off the $95.16 prior print; the slide toward $90 has reversed, the May $111 peak still ~$14 above.
Treasury: crude firm re-arms cost-push and lifts the dollar fuel bill — watch a $100 retest and the next CPI print.
WATCH
- ◆A $100 retest as the next threshold
- ◆Oil pass-through into the next BBS CPI print
- ◆Iran-war subsidy demand at Tk1.20tn on the FY27 budget
RISK
- ▼Crude firming through the mid-$90s widens the import bill
- ▼Renewed supply premium if Gulf hostilities escalate
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