Headlines
Current account narrows on remittance; graduation from least-developed status risks $17.5bn of exports.
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)
Rate holds 10%; May's 9.42% CPI ends the cut debate for now.
FX Reserves
WATCH
- ◆FY27 budget bank-borrowing line — banks +8%, savings tools +20%
- ◆Apr private credit at 4.75% as the demand tell
- ◆Whether the 9.42% May print forces a hawkish hold at the next MPS
RISK
- ▼Power-tariff hike compounds the May CPI jump to 9.42%
- ▼Reserves stale on the 1 Apr $35.11bn print — refresh lagging
Banking
On the Mar print, NPL holds 32.26%; CAR stuck 844bp below floor.
WATCH
- ◆Bank-level Q1 2026 disclosures — due June
- ◆Bank Resolution Act — ownership-return clause ruled not maintainable
- ◆Apr private credit at 4.75% — weakest demand in the cycle
RISK
- ▼CAR 844bp below floor on the Sep 2025 read — solvency hole unchanged
- ▼Sovereign crowding as FY27 lifts bank borrowing +8%
- ▼Leadership churn — StanChart CEO out, Resolution Act ownership clause struck down
The capital arithmetic has not moved, and the news around it is now about governance, not recovery. NPL holds 32.26% on the Mar 2026 print while CAR (Capital Adequacy Ratio) sits 1.56% on the Sep 2025 read — 844bp below the 10% floor; the bad-loan share eased but solvency never followed, still write-off and reclassification, not borrowers curing. The fresh signals are structural — a court ruled the Bank Resolution Act's ownership-return clause not maintainable, the merged Sammilito Islami Bank filled its board, and StanChart's CEO is leaving — scaffolding shifting while the hole stays open. Demand is no help: private credit growth fell to 4.75% in April, and the FY27 budget tilts borrowing +8% toward banks. The desk holds no fresh state-lender or stressed-private exposure and treats the bank-level Q1 2026 disclosures, due June, as the only print that separates write-off from recovery.
FX & External
May remittance jumps to $3.43bn; current account narrows even as exports slip 7%.
External Flow Balance
May remittance printed $3.43bn, up from $3.13bn, covering the $2.26bn trade gap with room as exports held $3.12bn, down 7% YoY.
Remittance steps up from the $3.13bn run since April; the current account narrowed despite a wider goods gap.
Treasury: remittance now over-covers the gap, but the June–July seasonal dip is the next drain — watch import-payment timing as Brent holds the mid-$90s.
WATCH
- ◆June–July seasonal remittance dip after the $3.43bn May print
- ◆IMF programme size and conditionality timeline
- ◆Brent at $94.35 — pass-through into import-payment lines
RISK
- ▼May exports -7% keep the goods gap wide at $2.26bn
- ▼Post-Eid seasonal dip could narrow the remittance cover
The external account is healing from the wrong side of the ledger. The goods gap stayed wide at $2.26bn — May exports slipped 7% to $3.12bn — yet the current account narrowed, because May remittance stepped up to $3.43bn from the $3.13bn run-rate that had held since April. Remittance, not trade, is carrying the balance, and it is doing so into its weakest season: pre-Eid inflows are past, and the June–July dip typically pulls the monthly figure down. USD/BDT held 122.75 and reserves $35.11bn through it, so the peg is not the question — the question is what backstops the surplus when the seasonal drain hits a still-shrinking export base. The IMF programme is the structural answer; the cyclical one is whether the July print holds above the trade gap. Treasury keeps import-payment timing tight and watches Brent's mid-$90s for the next import-bill leg.
DSE Markets
DSEX off 0.60% to 5,482.99; breadth craters to 102/248, turnover halves.
DSEX Index
DSEX fell 0.60% to 5,482.99 off the record; breadth cratered to 102/248 and turnover halved to BDT 1,072cr from BDT 1,529cr.
First close below the 5,516.16 record set the prior session; breadth flips from 184/160 to 102/248.
Risk/equity desk: the distribution tell confirmed — stay out of the broad board, hold large-cap quality; a turnover break below BDT 900cr is the cue to cut further.
WATCH
- ◆Whether turnover holds the BDT 900cr base — BDT 1,072cr today, off BDT 1,529cr
- ◆DS30 at 2,069 — large-cap quality the last support
- ◆Next T-Bill auction cut-offs post-budget — the front-end tell
RISK
- ▼Breadth 102/248 signals the broad market rolling over, not consolidating
- ▼FY27 budget supply pulls liquidity from the board into govt paper
- ▼A sticky 9.42% CPI keeps the front-end pinned — no cut fuel returns
The trade cracked where the internals said it would. DSEX fell 0.60% to 5,482.99 — the first close below the prior session's 5,516.16 record — but price is the smallest part of it: breadth collapsed to 102 advancing against 248 declining, and turnover drained to BDT 1,072cr from BDT 1,529cr. The narrowing advance on rising turnover was distribution; today large caps joined the retreat, DS30 slipping to 2,069 from 2,087. The rally was always a rates trade — a flat curve at 10.91% and a front-end pinned at 10.15% cut the discount on equity cash-flows and pulled deposit money onto the board. May CPI at 9.42%, a 16-month high, removed the cut the move discounted, and budget supply now competes for the same liquidity. The desk holds large-cap quality, stays out of the broad board, and treats a turnover break below BDT 900cr as the cue to cut further.
T-Bonds & T-Bills
Front-end steady at 10.15%; curve flat at 10.91% — May CPI the steepening risk.
BD Govt Yield Ladder
91d T-Bill held 10.15%, 364d 10.50%; the curve runs near-flat through 10y at 10.91%, the 5y–10y spread just 13bp.
The front-end has held 10.15% for fifteen straight reads since late April; the long end unmoved at 10.91%.
ALCO: the flat front-end fed the equity rally now rolling over; May CPI at 9.42% and FY27 supply are the steepening risks — watch the next cut-offs.
WATCH
- ◆Next auction cut-offs — first tell post-budget
- ◆FY27 borrowing mix — banks +8%, savings tools +20%
- ◆Whether the 9.42% May CPI forces the front-end higher
RISK
- ▼Fiscal crowding as borrowing tilts +8% to banks
- ▼Flat curve compresses net interest margin on ALM (Asset-Liability Management) books
- ▼Inflation re-acceleration re-steepens the front-end
Macro & Inflation
On the Mar print, 12m-avg 8.6%; May headline jumped to 9.42%, a 16-month high.
CPI Trend
CPI 12m-avg holds 8.6% on the Mar print, food 8.24%, non-food 9.09% — but the May headline P2P spiked to 9.42%, a 16-month high.
12m-avg at lowest since Mar 2023 (8.4% then), but the May spike flags the average turning back up.
MPC: the disinflation read is over — a confirmed tariff hike and 9.42% May CPI shut the cut window; expect a hawkish hold.
WATCH
- ◆Whether the May 9.42% spike forces a hawkish hold at the next MPS
- ◆Power-tariff pass-through into the June CPI print
- ◆Apr private credit at 4.75% — the demand tell
RISK
- ▼Power-tariff hike compounds the May CPI jump to 9.42%
- ▼Non-food above 9% constrains any MPC easing
- ▼Private credit at 4.75% signals demand destruction
Remittance
May remittance jumps to $3.43bn from $3.13bn; June–July dip the watch.
Remittance Inflow
WATCH
- ◆June–July seasonal pattern — pre-Eid inflows now past
- ◆Whether the $3.43bn pace holds into the seasonal dip
- ◆Gulf labour-policy shifts on worker headcount
RISK
- ▼Post-Eid seasonal dip typical in Jun–Jul
- ▼Informal-channel share widens if a kerb premium opens
Commodities
Gold firmed to $4,351/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
- ▼Gold reversal signals risk-on rotation
Fiscal
FY27 lifts bank borrowing 8%, savings-tool 20%; crowding pressure builds.
NBR Tax Revenue
NBR revenue collection stepped up — YTD reached BDT 3.27tn from BDT 2.88tn, lifting the monthly run-rate, though the pace still trails the FY26 target.
The BDT 3.27tn YTD level has held for the last eight reads after the step up from BDT 2.88tn.
Treasury/ALCO: a firmer collection run-rate trims the deficit at the margin, but FY27's +8% bank-borrowing tilt keeps crowding pressure on the curve.
WATCH
- ◆FY27 deficit-financing mix — banks +8%, savings tools +20%
- ◆NBR collection pace against the full-year target
- ◆AIT on export incentives halved — the revenue give-up
RISK
- ▼Crowding-out as the sovereign competes for bank funding
- ▼Borrowing past the FY26 ceiling pressures the T-Bill curve into FY27
Iran War & Oil
Brent eased to $94.35 from $95.59; the $90 line back in play, cost-push softens.
Brent Crude
Brent eased to $94.35 from $95.59, WTI $91.35 — the mid-$90s bounce faded, spot now ~$17 below the May $111 peak.
The slide toward $90 resumed after the brief bounce; the May $111 peak sits ~$17 above spot.
Treasury: the pullback trims the dollar fuel bill at the margin — watch a $90 break, but 9.42% CPI leaves no cost-push cushion.
WATCH
- ◆A $90 break versus a $95 retest
- ◆Oil pass-through into the June CPI print
- ◆OPEC+ June production decision
RISK
- ▼Renewed supply premium if the ceasefire frays
- ▼Any bounce re-arms the import bill into a 9.42% CPI
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