Headlines
Banks stayed flush and idle all week as reform headlines outran real demand.
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)
The front eased further this week to 9.31%; the 7-day fell to 9.16%.
FX Reserves
WATCH
- ◆Deposit-rate pass-through as the sub-policy front reaches term funding into H2
- ◆Whether the front cuts again or holds after the 30 July 50bp move at the next MPC
- ◆The overdue reserve refresh past the 31 Jul $36.42bn print — the external check behind the easy corridor
RISK
- ▼The easy corridor reaching the money market but not the 4.98% private-credit borrower
- ▼Deposit rates lagging the falling bill curve, squeezing bank margins into H2
- ▼A weak reserve refresh repricing the peg behind an easy front
Banking
The book held frozen all week — NPL 32.26%, CAR 844bp under floor.
WATCH
- ◆Q2 2026 NPL disclosure landing the court-stayed loan overhang past the 32.26% Q1 print
- ◆The new loan-recovery mediation and ADR (alternative dispute resolution) rules' first recoveries against the SCB tail
- ◆Bank deployment as private credit holds 4.98% — borrowing squeezed for want of scope
RISK
- ▼Court-stayed loan stock understating the printed 32.26% Q1 NPL ratio
- ▼SCB (State-Owned Commercial Bank) recapitalisation crystallising under the new resolution regime
- ▼Weak sheets unable to out-grow their bad-loan stock with private credit at 4.98%
The banking book stayed frozen and the freeze is still the story: NPLs 32.26% on Q1 2026, system CAR (Capital Adequacy Ratio) 1.56% on Q3 2025 — 844bp below the 10% floor, a cushion gone rather than thin. Neither moves until Q2 disclosure lands the court-stayed loan stock that already understates it. What changed this week was the policy scaffolding: the state floated a five-year cleanup plan, BB unveiled loan-recovery mediation and an ADR (alternative dispute resolution) track, and US Treasury officials endorsed the direction. All of it repairs the tail; none of it restarts the engine. Banks still borrow less for want of investment scope, and private credit sits at 4.98% — liquidity is not the constraint, creditworthy demand is. Dispersion stays the trade: own the private compounders, fade the SCB (State-Owned Commercial Bank) paper the resolution regime tests first.
FX & External
The taka firmed to 122.07 on soft demand while the reserve refresh stayed overdue.
External Flow Balance
USD/BDT firmed to 122.07 over the week on soft importer demand; reserves held $36.42bn against a $1.77bn trade gap, exports at $4.03bn.
Reserves on the 31 Jul print, cover 6.28mo — the August refresh still awaited 21 days on.
Treasury: the peg's calm is demand-led, not earnings-led — with Brent through $93, watch the reserve refresh over the daily spot.
WATCH
- ◆Whether 122.07 holds or the crawl resumes as Brent's $93.69 lifts import demand
- ◆The overdue reserve refresh past the 31 Jul $36.42bn print
- ◆Remittance and export receipts — the earned-dollar side as inflows thin
RISK
- ▼Brent through $93 re-widening an import bill soft demand had been masking
- ▼A reserve refresh below $36bn confirming the drain soft trade data imply
- ▼Both earned-dollar engines soft — remittance $2.82bn, exports held at $4.03bn
DSE Markets
DSEX bled ~2% on the week to a fresh low on Tk733cr turnover.
DSEX Index
DSEX bled ~2% over the week to a fresh low of 5,769.71 as turnover caved to Tk733cr; breadth off the 54/318 washout to 140 up, 198 down.
A fresh low across the 5,770–5,897 window — the 5,822 floor that broke early week now sits above.
Equity desk: a fresh low on record-thin turnover is exhaustion, not a bottom — stay flat until volume returns on up days.
WATCH
- ◆Whether turnover recovers on up days or keeps thinning below Tk733cr
- ◆Breadth holding its 140/198 repair or rolling back toward the 54/318 washout
- ◆Foreign portfolio flows as the external bid stays thin
RISK
- ▼A fresh low on no volume inviting the next leg once a seller appears
- ▼The Tk733cr turnover signalling participation has drained, not stabilised
- ▼Post-election policy uncertainty keeping domestic risk appetite sidelined
T-Bonds & T-Bills
The 10y collapsed 82bp on the week to 9.42%; 5s10s flattened to ~27bp.
BD Govt Yield Ladder
The 10y collapsed 82bp this week to 9.42% from a static 10.24%; the 91d cut to 9.03%, the 5y held 9.15%, flattening 5s10s to ~27bp.
The 10y sat at 10.24–10.25% across the whole window until this week; the front has cut at every recent auction.
ALCO: 5s10s flattens to ~27bp on one 10y print — fund term to the front, but confirm the long-end move before extending duration.
WATCH
- ◆Whether the 10y's 9.42% holds or mean-reverts toward the 10.24% it sat at all window
- ◆The next bill auction — whether the 91d cuts below 9% from 9.03%
- ◆5s10s at ~27bp — the flatter slope repricing long-dated fixed-rate books
RISK
- ▼A 10y round-trip back to 10.24% if the single-print rally proves a marks artifact
- ▼Belly and long supply into FY27 re-steepening the curve
- ▼Deposit and lending rates lagging the falling bill curve, squeezing margins
The week's defining move was a curve that flattened in a single print, and the size demands caution. The 10y had sat at 10.24–10.25% across the entire window; it now prints 9.42%, an 82bp collapse that drags 5s10s from ~109bp to ~27bp against a 5y anchored at 9.15%. The front corroborates the direction — the 91d cut ~16bp on the week to 9.03%, the 364d to 9.17%, the whole front sub-policy as BB's easing feeds through. Read straight, the long end finally caught the front's rally. Read sceptically, an 82bp one-day move in an illiquid long bond is as likely a marks artifact as a genuine repricing, and the round-trip back to 10.24% is real. The desk conclusion holds either way: fund term to a front that keeps falling, but do not extend duration into the 10y on a single unconfirmed print. Watch next week's auction and a second 10y mark before trusting the flatter curve.
Macro & Inflation
Private credit held stalled at 4.98% all week while the 12m-avg stayed 8.68%.
CPI Trend
The CPI 12m-avg held 8.68% on the Jun print all week; food 8.6%, non-food 9.61% — the trailing read still elevated as BB keeps easing.
Highest since Dec 2025 (8.8% then) — the trailing average still above the monthly food print.
MPC: the trailing average still elevated while private credit is dead at 4.98% — hold before easing further.
WATCH
- ◆The next 12m-avg print — whether the monthly turn pulls the trailing average down from 8.68%
- ◆Private credit at 4.98% — whether soft imports keep working-capital demand absent
- ◆Brent's $93.69 break and the fast-burning LNG subsidy feeding energy cost-push into the next CPI print
RISK
- ▼Private credit at 4.98% with M2 at 10.52% — liquidity present, demand absent
- ▼A thin 0.34% real policy rate leaving little carry cushion post-cut
- ▼Brent through $93 and energy-subsidy strain relighting cost-push before the inflation turn confirms
Remittance
July remittance held $2.82bn all week, a second straight month under $3bn.
Remittance Inflow
WATCH
- ◆Whether $2.82bn is a floor or the top of a slide after a second month under $3bn
- ◆The overdue reserve refresh past the 31 Jul $36.42bn print
- ◆Brent above $93 lifting the import bill against a soft inflow side
RISK
- ▼Earned dollars softening while reserves draw and Brent's $93 break lifts the energy bill
- ▼The margin over the $1.77bn trade gap no longer growing
- ▼A second sub-$3bn month tipping into a slide
Fiscal
NBR stayed stuck at Tk3.61tn all week while 43% of the LNG subsidy went.
NBR Tax Revenue
Monthly NBR revenue printed flat again all week, holding the YTD line at Tk3.61tn — no new receipt across the fourteen-print window.
Fourteen prints, all Tk3.61tn — the last new monthly figure predates the window.
Treasury: revenue frozen while 43% of the LNG subsidy is spent in six weeks — the FY27 gap widens from the spending side.
WATCH
- ◆The next monthly NBR print — the Tk3.61tn line has not moved in fourteen reads
- ◆The LNG subsidy burn rate — 43% spent in six weeks with Brent through $93
- ◆Govt bank borrowing crowding private credit already at 4.98%
RISK
- ▼A thin revenue base carrying the FY27 gap as receipts stall at Tk3.61tn
- ▼The energy-subsidy claim widening as Brent breaks $93 above the $80 FY27 line
- ▼Over 90% of economic units outside the tax net capping any revenue lift
Iran War & Oil
Brent broke $90 this week to $93.69, now $13.69 above the FY27 line.
Brent Crude
Brent broke $90 this week and pressed to $93.69, WTI $86.77 — crude extending the break rather than fading to the $80 line.
Up from $91.52 on Thursday and now $13.69 above the $80 FY27 line — a sustained push through $90.
Treasury: each dollar on Brent re-widens the import bill and the FY27 subsidy claim — the $90 break holds, watch $95.
WATCH
- ◆Whether Brent presses on above $93.69 toward $95 or the fade resumes to the $80 FY27 line
- ◆The FY27 fuel-subsidy provision with spot now $13.69 over the $80 assumption
- ◆The LNG subsidy burn — 43% gone in six weeks — as crude holds above $90
RISK
- ▼Brent above $93 stacking crude plus freight onto a $1.77bn trade gap
- ▼The fast-burning LNG subsidy compounding energy cost-push into the next CPI print
- ▼A Gulf re-escalation carrying Brent higher onto the import bill and the peg
Crude was the week's cleanest one-way trade, with the widest reach into the book. Brent broke $90 and pressed to $93.69, WTI $86.77 — the level that had capped it now sits below, and the move is extending rather than fading toward the $80 FY27 assumption it is now $13.69 above. The transmission into Bangladesh is direct and compounding: each dollar re-widens an import bill a $1.77bn trade gap already strains, and accelerates a fuel-subsidy claim that has burned 43% of the annual LNG provision in six weeks. It also threatens the inflation turn the MPC awaits — non-food CPI already prints 9.61%, energy cost-push not yet in the base. The desk read: crude is now the swing variable across FX, fiscal and macro at once — position for a wider import bill and a later, shallower easing path if Brent holds above $90 into next week's prints.
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