Headlines
FY27 begins — budget passed, new BB chief picks contraction, easing calls rebuffed.
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)
New chief keeps 10% and the tight line; easing calls rebuffed.
FX Reserves
WATCH
- ◆June CPI for the 15% VAT and high-powered-money pass-through into the FY27 MPS
- ◆The lending-deposit spread cap's bite on bank net interest margin
- ◆Gross reserves net of JICA against the post-Eid remittance dip
RISK
- ▼New chief's contraction colliding with FY27's private-sector-tilted budget
- ▼Reserve build loan-funded — net softer than the $34.55bn gross
- ▼Sticky non-food CPI at 9.09% undercutting any easing window
The day's policy pivot is not a number — it is a signature. The new BB chief inherits the April 2026 stance and keeps it, choosing contraction as inflation stays high over the cut the DCCI and business lobby want under an FY27 budget pitched at the private sector. The tension is deliberate: BB's own 6.1% growth call sits 40bp below the government's 6.5% — an implicit admission that tight policy costs output. Transmission has already moved to the balance sheet: the lending-deposit spread cap ceilings net interest margin just as thin-capital banks need internal capital generation, while the front-end has run its cut to 9.44% on excess liquidity the sector parks in government paper rather than lends. Read the contraction as a currency defence as much as an inflation one — holding rates protects the managed USD/BDT crawl and the rented reserve stack. No cut before June CPI clears the 15% VAT.
Banking
Capital still binds — 1.56% CAR, 844bp below floor; the rally is sentiment, not solvency.
WATCH
- ◆Bank-level Q1 2026 disclosures — write-off vs recovery split
- ◆The lending-deposit spread cap's drag on net interest margin
- ◆Whether the DSEX bank-sector rally survives Q1 capital disclosure
RISK
- ▼CAR 844bp below floor — the solvency hole unmoved on the Sep 2025 read
- ▼Spread cap compressing margins atop a 6.03% credit book
- ▼A reform-led equity rally outrunning a 1.56% sector capital ratio
Banking remains the system's structural bind, and the Q1 print does not move it: NPLs hold 32.26% on a 1.56% CAR (Capital Adequacy Ratio) — 844bp below the 10% floor, propped on write-off arithmetic, not cures. A hole this deep is a solvency problem no reclassification closes. The FY26 tape complicates the read: DSEX rallied 19% on the year, bank stocks leading, even as the sector carries a capital ratio near zero — the market pricing reform and reopening, not repair. Regulatory pressure runs the other way: BB's cap on the lending-deposit spread ceilings net interest margin precisely when thin-capital banks need every basis point of internal capital generation, while banks park idle liquidity in government paper as private credit holds a 60-period low of 6.03%. The desk reads the equity bounce as sentiment, and holds defensive until a recapitalisation lands.
FX & External
Mid holds 122.85 into FY27; reserves stay borrowed as financing tilts offshore.
External Flow Balance
Remittance held $3.43bn against May's $3.04bn trade gap — cover just $0.39bn; the mid held USD/BDT 122.85 into FY27.
Pre-Eid inflows now past; the June–July post-Eid dip lies ahead with reserves leaning on JICA and WB money.
Treasury: the managed crawl is paused, not done — watch the post-Eid dip and FY27's offshore-tilted debt service against rented reserves.
WATCH
- ◆Whether the new BB chief resumes the mid's walk toward the ~123 market
- ◆June–July post-Eid remittance dip after the $3.43bn May print
- ◆FY27 external-financing mix now the Tk 9.38tn budget is enacted
RISK
- ▼Reserve build rented — net softer than the $34.55bn gross
- ▼External debt raises FX service against thin reserves
- ▼Remittance clears the gap by just $0.39bn — one soft month from negative
FX carries the day's thesis, and on the first morning of FY27 the gauge sits still: BB holds the mid at USD/BDT 122.85, the managed crawl paused after last week's 10-paisa walk toward a market near 123. The pause is a choice, not a floor — and the new BB chief's contractionary stance is as much a currency defence as an inflation one. The headline reserve figure flatters: $34.55bn on the books, but the lift is rented — JICA money and fresh WB tranches against external debt of $78.22b. FY27's financing leans the same way, the Tk 9.38tn budget tilting toward offshore borrowing that props reserves while stacking the service line. The account underneath is unchanged: May's $3.04bn trade gap clears its $3.43bn remittance by just $0.39bn, import cover at 5.86 months. The book stays defensive on sovereign-linked FX service; the FY27 debt-service line is the call.
DSE Markets
Tracked DSEX frozen at 5,257; the bourse closed FY26 up 19% on reform flows.
DSEX Index
Tracked DSEX frozen at the 21 Apr 5,257 print; the bourse closed FY26 up 19%, press reporting the index back above 5,700.
Tracked feed holds 21 Apr's 5,257 across non-trading sessions; the 19% FY26 rally is reform-led, banks leading.
Equity desk: treat the tracked 5,257 as a data lag — FY27's reopen reprices a bank-heavy index on a 1.56% sector capital ratio.
WATCH
- ◆Reconciliation of the tracked 5,257 feed to the reported post-FY26 level
- ◆Bank-sector tone given the 1.56% capital ratio and the spread cap
- ◆Whether FY27 turnover confirms the 19% FY26 breakout or fades it
RISK
- ▼Bank-heavy index exposed to the 32.26% distressed-loan pile
- ▼A reform-led rally outrunning a 1.56% sector capital ratio
- ▼Stale tracked tape masking the true repricing
T-Bonds & T-Bills
The front-end cut deepens to 9.44%; excess liquidity underwrites the bid into FY27 supply.
BD Govt Yield Ladder
Front-end cut deepened — 91d to 9.44% from 9.70%, 364d to 9.74%, 10y holding 10.24%, ~67bp under the earlier 10.91%.
The 91d held 9.70% for seven reads before today's step to 9.44%; the 10y anchored at 10.24% since the post-budget rally.
ALCO: the front-end eases as the external account tightens — fund short, but margins compress; watch the first FY27 auction for supply.
WATCH
- ◆Whether the next auction extends the 91d cut below 9.44%
- ◆June CPI — non-food at 9.09% the risk to the front-end bid
- ◆FY27 gross supply as the Tk 9.38tn budget's financing hits the auction calendar
RISK
- ▼FY27 deficit math re-steepening the curve as borrowing returns onshore
- ▼The new chief's contraction re-pricing the front-end if liquidity tightens
- ▼The rally compressing margins on short-funded ALM (Asset-Liability Management) books
Macro & Inflation
On the Mar print, 12m-avg held 8.6% — lowest since Mar 2023; credit 6.03%.
CPI Trend
CPI 12m-avg held 8.6% on the Mar print — food 8.24%, non-food 9.09% — the disinflation read stalled.
12m-avg at lowest since Mar 2023 (8.4% then), but non-food at 9.09% keeps the average from falling.
MPC: the new BB chief keeps policy tight — yet the front-end already cut to 9.44% and credit at 6.03% says capital, not rates, binds.
WATCH
- ◆June CPI for the 15% VAT and high-powered-money pass-through
- ◆Non-food above 9% (9.09%) as the stickiness tell
- ◆Whether the new chief's contraction holds against DCCI easing pressure
RISK
- ▼The uniform 15% VAT compounding the June CPI
- ▼Private credit at 6.03% signalling dead demand as industry slows
- ▼New chief's contraction deepening the credit-demand hole
Remittance
Remittance held $3.43bn; cover over the $3.04bn gap stays thin into the post-Eid dip.
Remittance Inflow
WATCH
- ◆June–July seasonal pattern — pre-Eid inflows now past
- ◆Whether the $3.43bn pace holds into the dip as the gap stays wide
- ◆Whether a kerb premium opens as the mid holds 122.85
RISK
- ▼Post-Eid seasonal dip typical in June–July — cover already thin at $0.39bn
- ▼Informal-channel share widening if the official-market spread widens
Commodities
Gold eases to $4,026; LNG holds $15 on a stale 20 Apr tape.
WATCH
- ◆LNG spot for June–August monsoon-demand pricing
- ◆Gold as a global risk-sentiment proxy near $4,026/oz
RISK
- ▼LNG spike on monsoon power demand lifting Petrobangla off-take costs
- ▼Gold strength signalling risk-off rotation that pressures EM flows
Fiscal
FY27 budget passed at Tk 9.38tn; NBR run-rate lifts to Tk 3.61tn but financing tilts offshore.
NBR Tax Revenue
Monthly NBR revenue stepped up — YTD collection lifts to Tk 3.61tn from a Tk 3.27tn plateau as year-end receipts land.
The Tk 3.27tn YTD level held across the last twelve reads — this is the first move off the plateau.
Treasury/ALCO: even with the run-rate lifting, the FY27 deficit leans offshore — the Tk 9.38tn budget tilts financing toward external borrowing.
WATCH
- ◆FY27 revenue mix under the acting NBR chairman
- ◆Whether the Tk 3.61tn run-rate sustains into FY27 collection
- ◆External-financing pricing as the Tk 9.38tn budget's deficit leans offshore
RISK
- ▼Offshore tilt swapping domestic crowding for FX-denominated service as the runway thins
- ▼Whitening-end and threshold lift narrowing the near-term tax base
- ▼A tax base near the world's lowest capping collection against target
Iran War & Oil
Brent eases to $73.35, WTI $69.99; the import cushion holds below $80.
Brent Crude
Brent eased to $73.35 (WTI $69.99), a touch softer on the day but steady below $80 after the post-war unwind.
Spot sits well under $80 still; the sub-$80 zone that underwrote FY27's pre-war oil math holds.
Treasury: the import-bill cushion stays open below $80 — watch the $80 line and the US-Iran deal's durability into the two-month window.
WATCH
- ◆The $80 line and whether the US-Iran accord holds past the two-month window
- ◆Oil pass-through into June CPI atop the 15% VAT
- ◆Import-bill drag against the $3.04bn trade gap and the mid at 122.85
RISK
- ▼A talks collapse re-arming the subsidy and import-bill tail
- ▼Hormuz-route risk to Bangladeshi cargo through the strait
- ▼FY27 projections under-provisioning if oil round-trips higher
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