Headlines
Strains surface — inflation model breaches ceiling, profits sink, banks shift off lending.
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)
Tight stance vindicated — BB's model sees FY27 CPI above its own ceiling.
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 net interest margin as banks shift off lending income
- ◆Gross reserves net of JICA against the post-Eid remittance dip
RISK
- ▼BB's model overshoot signalling no easing window through FY27
- ▼Reserve build loan-funded — net softer than the $34.55bn gross
- ▼The 4 sick NBFCs and the spread cap straining a thin-capital sector
The day's monetary signal is forward-looking: BB's own model now sees FY27 inflation breaching the ceiling it set — an admission, on the April 2026 stance held at 10%, that the disinflation glide is not assured. That vindicates the new chief's contraction over the easing the DCCI and business lobby press for. But the transmission problem is now explicit in the tape: the front-end has already cut the 91d to 9.44% on excess liquidity banks park in government paper, and lending is no longer the sector's main earner — the spread cap pushing income to fees and treasury. Hold rates and the currency together: the tight line is as much a defence of the USD/BDT 122.85 mid and the rented reserve stack as of the CPI. No easing before June CPI clears the 15% VAT.
Banking
Capital still binds — 1.56% CAR, 844bp below floor; lending no longer the earner.
WATCH
- ◆Bank-level Q1 2026 disclosures — write-off vs recovery split
- ◆The shift of income from lending to fees and treasury as the spread cap compresses margins
- ◆BB's 7-point bad-loan plan and the 3-month clock on 4 sick NBFCs
RISK
- ▼CAR 844bp below floor — the solvency hole unmoved on the Sep 2025 read
- ▼Corporate profits down 44% feeding the next NPL vintage
- ▼Spread cap compressing margins atop a 6.03% credit book
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. Two fresh signals sharpen the read. First, the earnings engine is bending: banks no longer make most of their money from lending — the spread cap is pushing income to fees and government-paper carry precisely when thin-capital banks need internal capital generation most. Second, the demand side is deteriorating — listed corporate profits fell 44% as inflation and the energy crisis bit, seeding the next NPL vintage. BB's 7-point bad-loan plan and the 3-month clock on four sick NBFCs are triage, not repair. The desk holds defensive until a recapitalisation lands.
FX & External
Mid holds 122.85; ITFC's $3.3bn import line keeps the runway leased.
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 as reserves lean on ITFC, 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 pricing as ITFC, JICA and WB tranches carry the runway
RISK
- ▼Reserve build rented — net softer than the $34.55bn gross
- ▼Remittance clears the gap by just $0.39bn — one soft month from negative
- ▼Offshore-tilted FY27 financing stacking the FX debt-service line
FX carries the day's thesis, and on FY27's second morning 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 chief's contraction 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. Today's ITFC confirmation of $3.3bn in fertiliser and fuel import financing is the thesis in miniature — the import bill increasingly funded offshore, propping reserves while stacking the FX 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 — one soft, post-Eid month from negative. 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 and a 44% profit fall
- ▼Stale tracked tape masking the true repricing
T-Bonds & T-Bills
Front-end holds 9.44%; excess liquidity underwrites the bid into FY27 supply.
BD Govt Yield Ladder
Front-end holds its cut — 91d at 9.44%, 364d 9.74%, 182d 9.71%; the 10y anchors 10.24%, ~67bp under the earlier 10.91%.
The 91d has held 9.44% for three reads after stepping down from 9.70%; the 10y unmoved since the post-budget rally.
ALCO: the front-end stays easy as the external account tightens — fund short, but margins compress; watch the first FY27 auction for supply.
WATCH
- ◆Whether the first FY27 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: BB's model now sees FY27 CPI over ceiling, keeping policy tight — yet the front-end cut to 9.44% 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
- ◆BB's model overshoot against the DCCI's easing pressure
RISK
- ▼The uniform 15% VAT compounding the June CPI
- ▼Private credit at 6.03% signalling dead demand as corporate profits fall 44%
- ▼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 firms to $4,056; 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 $4,056/oz
RISK
- ▼LNG spike on monsoon power demand lifting Petrobangla off-take costs
- ▼Gold strength signalling risk-off rotation that pressures EM flows
Fiscal
Revenue hits Tk 4.2tn, narrowing the gap; NBR YTD at Tk 3.61tn, financing tilts offshore.
NBR Tax Revenue
Monthly NBR revenue stepped up — YTD collection lifted 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 eleven reads — this is the first move off the plateau.
Treasury/ALCO: even as the run-rate lifts and revenue hits Tk 4.2tn, the FY27 deficit still leans offshore — external borrowing over domestic.
WATCH
- ◆FY27 revenue mix under the acting NBR chairman
- ◆Whether the Tk 3.61tn NBR 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
- ▼A tax base near the world's lowest capping collection against target
- ▼The Tk 1.25tn bank-borrow YTD past the FY26 ceiling
Iran War & Oil
Brent eases to $71.18, WTI $68; the import cushion holds below $80.
Brent Crude
Brent eased to $71.18 (WTI $68.00), extending the post-war slide and holding well below $80.
Spot ~$2 under yesterday's $73.35, still well below $80 — the zone underwriting 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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