Headlines
Regulatory housekeeping and a thin market; the credit story sits underneath.
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)
Holding at 9.50%; ample liquidity keeps the overnight rate soft.
FX Reserves
Gross reserves climbed from $31.09bn (Nov 2025) to $36.42bn as of the Jul 2026 print, though off the $37.58bn series peak.
Up from the $31.09bn Nov 2025 low, still short of the $37.58bn series high.
Treasury: the reserve build supports the FX peg, but the cover read predates today by a month — watch the next weekly print.
WATCH
- ◆Next MPS for any shift in the 9.50% policy stance
- ◆A gross reserves refresh past the 31 Jul $36.42bn read
- ◆Call money drift toward the 7.50% SDF floor
RISK
- ▼A reserves refresh below the 31 Jul $36.42bn level
- ▼Liquidity glut delaying pass-through of the 30 Jul cut to lending rates
Banking
State-bank stress dominates; provisioning and capital rebuild remain the binding constraints.
Overnight Money Market
Overnight funding cheapened: DOMMR (Dhaka Overnight Money Market Rate) at 9.18% and BOFR (Bangladesh Overnight Financing Rate) at 9.23% on the 27 Aug print, off April's 10.4%-plus.
BOFR has fallen from its 10.42% high since the chart's 15 Apr 2026 start.
Treasury: cheaper overnight funding eases short-term rollover cost, but the softness signals liquidity is ample — expect deposit-rate pressure to persist.
WATCH
- ◆The Q2 2026 NPL disclosure to confirm the Q1 32.26% trajectory
- ◆Any BB capital-rebuild or merger directive for state banks
- ◆The provisioning shortfall as it feeds the next CAR print
RISK
- ▼A fresh NPL print above the Q1 32.26% level
- ▼CAR erosion below the Q3 2025 1.56% read on new provisioning
- ▼Concentration of the stressed stock in a few state-bank balance sheets
The banking system's strain is on the asset side, not the funding side. Non-performing loans at 32.26% in the Q1 2026 print sit against a system CAR of 1.56% from Q3 2025 — a gap that says reported capital is thin relative to the stressed book, before any further migration of loans into the substandard buckets. Most of that NPL stock is concentrated in the state-owned commercial banks, so the headline ratio overstates the stress at well-run private lenders and understates it at the weakest state banks; the average is not the exposure. With private credit growing just 4.98% YoY, banks are rationing new lending to preserve capital, which slows the balance-sheet growth that would otherwise dilute the ratio. The desk should price state-bank and unsecured small-business exposure on the tail, not the mean, and treat the coming Q2 disclosure as the binding data point rather than the year-old CAR read.
FX & External
Taka strengthening trims export competitiveness; reserve cover rests on the July print.
External Flow Balance
Monthly exports reached $4.20bn and imports $7.51bn as of the Jun 2026 print, widening the trade gap; exports were up from $3.35bn a year earlier.
Imports have climbed to a series-high $7.51bn from $4.39bn in Jun 2025, outpacing the export recovery.
Treasury: the import bill is outrunning exports, so reserve cover leans on remittance inflows — watch the July trade print for the gap trend.
WATCH
- ◆USD/BDT drift below 122.99 and the pass-through to exporters
- ◆July export and trade-gap prints to update the June $3.31bn gap
- ◆A reserves refresh past the 31 Jul $36.42bn read
RISK
- ▼A firmer taka compressing garment-export margins
- ▼An import bill above the June $7.51bn run-rate widening the gap
- ▼Reserve cover aging without a fresh print
The taka has been firming — USD/BDT 122.99 in the 29 Aug quote — and the trade-off is now visible in the export numbers. A stronger local currency lowers the domestic-currency value of dollar receipts, which is what exporters mean when they say competitiveness is weakening; the June export print of $4.20bn already sits against imports of $7.51bn for a $3.31bn monthly trade gap. For the desk, the firmer taka cuts two ways: it eases the import bill and the cost of dollar-denominated obligations, but it squeezes garment-export realisation at the margin, where much of the corporate book's foreign-currency earning sits. Reserves at $36.42bn for the 31 Jul print give roughly 4.8 months of import cover on June data — adequate, but the read is aging. The position is to watch export-side receivables and the July trade print rather than the spot rate alone.
DSE Markets
Breadth positive, turnover thin — the rally lacks conviction below Tk500cr.
DSEX Index
DSEX at 5,655.68 on the 27 Aug print is barely changed from 5,594.39 a year earlier, having ranged between 4,702 and 5,926 over the year.
Up just 1.1% over the trailing year, and below the 5,926 series peak within the window.
Equity desk: a flat year and a peak well above spot — index direction hinges on turnover returning, not on breadth alone.
WATCH
- ◆A turnover recovery back above Tk500cr to confirm the bid
- ◆The DSEX holding above the 5,600 area
- ◆Breadth if advancers narrow against decliners
RISK
- ▼Thin turnover leaving the index gain vulnerable to reversal
- ▼Narrow leadership as participation stays below Tk500cr
T-Bonds & T-Bills
Bill yields drifting lower post-cut; the curve is repricing to the 9.50% policy.
BD Govt Yield Ladder
On the monthly series, the 91-day T-Bill yield rose to 9.79% in the Jul 2026 print from 9.44% in June, with the 364-day at 10.09%.
These are Jul 2026 monthly readings — the chart predates the late-August auction cut-offs by over a month.
Rates desk: the monthly curve lags the auction move lower, so expect the next monthly print to catch down toward the August cut-offs.
WATCH
- ◆The next weekly auction for continued cut-off compression below the 91-day 8.83%
- ◆A 5y/10y refresh past the 21 Aug print
- ◆Bid-cover at auctions as yields fall
RISK
- ▼Falling cut-offs squeezing bank margins on the government book
- ▼Yield compression outpacing the deposit-rate adjustment
Macro & Inflation
Real policy rate positive as CPI eases, but broad-money growth quickens.
CPI Trend
The 12-month average CPI eased to 8.66% in the Jul 2026 print from 9.77% a year earlier, near the series low of 8.59%.
Down from a 10.34% series peak; 12-month CPI now sits just above its 8.59% series low.
Treasury: with the real policy rate positive and CPI near series lows, expect the MPC to hold at the next MPS rather than cut.
WATCH
- ◆The August CPI print for continued deceleration below 8.66%
- ◆The M2 trajectory past the June 11.11% read
- ◆Private credit recovery from the 4.98% August pace
RISK
- ▼Non-food inflation at 9.28% keeping headline CPI sticky
- ▼Broad-money acceleration re-igniting price pressure while credit stalls
- ▼Real Effective Exchange Rate (REER) above 100 signalling a dear taka on the March print
The macro picture is easing prices but loosening money. The 12-month average CPI has come down to 8.66% on the Jul 2026 print from close to 10% a year earlier, and with the repo held at 9.50% the real policy rate is now positive at 1.18% — the first genuine cushion for savers this cycle. Against that, broad money (M2) growth at 11.11% in the June print is the highest since Sep 2021 (11.2% then), while private credit is expanding only 4.98% YoY. The wedge matters: money is being created faster than the system is lending it to firms, consistent with banks parking liquidity rather than extending credit into a high-NPL environment. For the desk, a positive real rate plus soft private credit argues the MPC has little reason to cut further at the next MPS; the broad-money pickup is the variable to watch for a renewed inflation impulse.
Remittance
July remittance $2.86bn, up about 15% YoY — a steady reserve support.
Remittance Inflow
Monthly remittance was $2,858.68mn in the Jul 2026 print, up from $2,421.9mn a year earlier; inflows peaked at $3,755.1mn within the year.
Up about 18% from the $2,421.9mn low of Aug 2025, though below the $3,755.1mn peak seen during the year.
Treasury: remittance remains the primary offset to the trade gap — sustained inflows above $2.8bn underpin the reserve build and the FX-peg defence.
WATCH
- ◆August remittance against the July $2.86bn run-rate
- ◆Festival-cycle seasonality in the coming inflows
- ◆Formal-channel share versus informal (hundi) leakage
RISK
- ▼A pullback below the $2.86bn July pace weakening reserve support
- ▼A firmer taka nudging inflows toward informal channels
Fiscal
Revenue holding at BDT 3.61tn; the June borrowing print anchors fiscal financing.
NBR Tax Revenue
Monthly NBR revenue was BDT 28,027cr in the Oct 2025 print, up from BDT 26,555cr a year earlier; the series has ranged BDT 21,478–52,720cr.
The Oct 2025 reading sits well below the BDT 52,720cr series peak, up only 5.5% on Oct 2024.
Treasury: soft revenue growth keeps the deficit reliant on bank borrowing — expect government paper supply to stay firm into the next auctions.
WATCH
- ◆A fresh NBR monthly collection against the BDT 3.61tn YTD run-rate
- ◆A July government bank-borrowing update past the BDT 0.94tn June print
- ◆ADP execution pace, flagged as slow in today's headlines
RISK
- ▼A revenue shortfall widening the deficit and bank-borrowing need
- ▼Government borrowing crowding out private credit already at 4.98% YoY
Iran War & Oil
Brent at $88, off summer highs — import-bill pressure easing at the margin.
Brent Crude
Brent eased to $88.01 as of the 28 Aug print from $92.05 at end-May, having swung between $71.18 and $100.38 over the span.
Off the $100.38 high of the period and well above the $71.18 low, crude has settled mid-range since end-May.
Treasury: crude mid-range near $88 keeps import-bill pressure contained — watch for a break above $92 that would reopen reserve-drain risk.
WATCH
- ◆Brent holding below the $92 end-May level
- ◆Any supply shock lifting crude back toward the $100 quarter-high
- ◆Pass-through to the monthly import bill
RISK
- ▼A crude spike widening the dollar import bill and trade gap
- ▼Renewed Iran-related supply risk reversing the easing
Every morning.
Free.