Headlines
Bad loans top Tk 6tn as energy shortages and cost pressure crowd the tape.
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)
Corridor intact; overnight money sits inside it as liquidity stays easy.
FX Reserves
Gross reserves climbed from $31.09bn in Nov 2025 to $36.42bn by the 31 Jul print, off a $37.58bn peak along the way.
Up more than $5bn over nine months, though the latest reading is a month-end 31 Jul print.
Treasury: net reserves at $31.60bn now cover the import bill more comfortably, but confirm the August refresh before sizing FX-linked exposures.
WATCH
- ◆Next reserves refresh against the $36.42bn 31 Jul print
- ◆Call money drift toward the 7.5% SDF floor if liquidity loosens further
- ◆Any BB corridor signal at the next MPS
RISK
- ▼Reserve drawdown accelerating if import demand rebuilds
- ▼Overnight rate volatility as month-end funding tightens
- ▼Rate easing running ahead of the inflation path
Banking
Asset quality entrenched at distressed levels as classified loans push past Tk 6tn.
Overnight Money Market
Dhaka Overnight Money Market Rate (DOMMR) eased from 10.09% in mid-April to 9.27% by the 2 Sep print, a full 82bp of overnight easing.
The overnight rate has fallen steadily since April, bottoming near 9.18% before the 2 Sep read.
Treasury: easy overnight funding at sub-9.3% supports carry, but a 32% NPL book means the rate relief is not reaching credit growth.
WATCH
- ◆Q2 2026 NPL disclosure for direction off the 32.26% Q1 print
- ◆Fresh CAR data to replace the Q3 2025 read
- ◆SOCB recapitalisation or merger signals
RISK
- ▼Provisioning shortfall widening as classified loans pass Tk 6tn
- ▼State-bank capital erosion feeding sovereign contingent liability
- ▼Credit growth stalling as banks ration lending against weak capital
The two figures that define the sector are a year apart and point the same way. NPLs at 32.26% on the Q1 2026 print sit against an aggregate CAR last read at 1.56% for Q3 2025 — a system carrying roughly a third of its book as classified against a capital base that, on the latest print, barely clears one and a half percent. Classified credits crossing Tk 6.0tn confirms the stock is still building. The concentration matters more than the ratio: the bulk sits in a few state-owned commercial banks, which turns a sector problem into a fiscal one, since their recapitalisation lands on the sovereign balance sheet. For the desk, that argues for tight counterparty limits on the weakest state names, careful collateral treatment on interbank and syndication exposure to them, and no reliance on a published CAR that predates the current bad-loan run.
FX & External
Spot anchored near 122.7; August exports reportedly up 13%, our trade prints still June.
External Flow Balance
Imports hit a series-high $7.51bn in Jun 2026, up 71% from $4.39bn a year earlier, far outpacing exports at $4.20bn.
Exports rose 25% year on year to $4.20bn but the import surge widened the June trade gap.
Treasury: an import bill rebuilding toward $7.5bn a month pressures the reserve buffer — watch whether the reported August export jump can offset it.
WATCH
- ◆August export confirmation against the Jun $4.20bn print
- ◆Reserve refresh past the 31 Jul $36.42bn read
- ◆USD/BDT drift off the 122.72 anchor
RISK
- ▼Trade gap staying near $3.31bn a month draining reserves
- ▼Import demand rebuilding faster than export recovery
- ▼Remittance seasonality fading after the August flash
DSE Markets
Modest bid as breadth improves; index still churning below its highs.
DSEX Index
DSEX ended the 2 Sep print at 5,660, up just 0.5% over 12 months after ranging from 4,703 to 5,926.
A full year of churn: the index sits within 30 points of where it opened last September.
Treasury: a year of flat equity beta means the DSEX bid rests on falling yields, not earnings — watch turnover for conviction.
WATCH
- ◆Turnover trend — whether BDT 731 crore builds or fades
- ◆DS30 blue-chip leadership versus the broad index
- ◆T-bill cut-offs feeding the equity-versus-fixed-income switch
RISK
- ▼Thin turnover leaving the index exposed to single-name reversals
- ▼Rate cuts reversing if inflation reaccelerates, pulling the yield bid back
- ▼Foreign participation staying light as FX conversion friction persists
The move worth reading is not the 0.41% tick but the backdrop against it. The 91-day T-Bill cut-off has fallen to 8.73% at the 31 Aug auction from 9.79% two months earlier, and the long end has followed — the 10-year printed 9.23% on the 21 Aug read against 10.24% in July. As the risk-free curve drops close to a full point, the case for holding cash and short paper weakens and marginal money looks for yield in dividend-paying equities. That is the mechanism behind a firming DSEX on thin BDT 731 crore turnover: the bid is real but narrow, driven by rate substitution rather than an earnings upgrade. For the desk this is a low-conviction tape — a rate-led bid unwinds fast if an inflation print pushes the curve back up, so treat DSEX strength as rate-sensitive, not a durable re-rating.
T-Bonds & T-Bills
The whole curve has shed about a point since July; auctions keep clearing lower.
BD Govt Yield Ladder
Every tenor on the ladder fell across three monthly prints — the 91-day from 9.79% to 8.73%, the 10-year from 10.24% to 9.23%.
By the Sep 2026 print the ladder had dropped about a point from Jul 2026, flattening as it fell.
Treasury: with the curve down a point and flat, the easy carry is realised — favour taking duration gains over adding at these levels.
WATCH
- ◆Whether the September auctions extend the sub-9% bill trend
- ◆10-year direction off the 9.23% 21 Aug mark
- ◆Duration demand as the curve flattens
RISK
- ▼Yields reversing if the inflation print surprises higher
- ▼Duration mark-to-market swings on held bond books
- ▼Thin secondary liquidity distorting the long-end marks
The move across the curve is the cleanest signal in the issue. Since the July auctions the 91-day T-Bill cut-off has dropped from 9.79% to 8.73%, the 364-day from 10.09% to 8.89%, and the long end harder still — the 10-year fell from 10.24% to 9.23% and the 20-year from 10.40% to 9.13% on the monthly marks. That is a near-parallel decline of about a point in eight weeks, with the long end outrunning the short, so the curve has shifted down and flattened. The driver is liquidity: overnight money is easing and the policy-rate cut has fed through to primary auctions. For the desk, the market has largely priced the easing; bond books have booked the capital gain, and the asymmetry now favours caution — more room for yields to snap back on an inflation surprise than to keep falling. Lock realised duration gains rather than chase the last leg.
Macro & Inflation
Real policy rate barely positive as CPI holds near 8.7% and money growth accelerates.
CPI Trend
The 12-month average CPI eased to 8.66% by the Jul 2026 print, down from 9.95% two years earlier and 9.77% a year ago.
Still well above the 8.59% series low, and food point-to-point has come off its 13.8% peak to 8.6% on the June point.
Treasury: with the 12-month average stuck above 8.5%, the real policy rate stays thin and the MPC has little room to cut further.
WATCH
- ◆August CPI for confirmation of the 8.66% easing trend
- ◆REER (Real Effective Exchange Rate) refresh past the stale Mar 2026 102.78 print
- ◆Whether the M2-versus-private-credit gap persists
RISK
- ▼Non-food inflation at 9.28% keeping the real rate compressed
- ▼M2 at 11.11% feeding a second-round price impulse
- ▼Private credit stuck near 5% signalling weak demand
Remittance
August inflows around $2.82bn, provisional but comfortably above last year's $2.42bn.
Remittance Inflow
Monthly remittance ran at $2.86bn on the Jul 2026 point, up from $2.42bn a year earlier, after peaking at $3.76bn in the interim.
The twelve-month low was $2.42bn last August, so inflows have held a clearly higher base through the year.
Treasury: a remittance base near $2.8bn a month is the steadiest source of FX supply — it cushions the reserve draw against the import bill.
WATCH
- ◆Finalisation of the $2.82bn August flash
- ◆Whether inflows hold above $2.8bn into the autumn
- ◆Channel shift between formal and informal remittance
RISK
- ▼Provisional figure revising lower on finalisation
- ▼Post-peak seasonal fade below $2.8bn
- ▼Exchange-rate spread pulling flows to informal channels
Fiscal
Revenue at Tk 3.61tn and bank borrowing at Tk 0.94tn on the June print.
NBR Tax Revenue
NBR's monthly revenue reached Tk 28,027 crore on the Oct 2025 print, a 5.5% gain on the Tk 26,555 crore booked a year earlier.
The monthly series has ranged from Tk 21,478 crore to Tk 52,720 crore since Jul 2023.
Fiscal: revenue growth near 5% year on year lags nominal GDP, so the deficit and the government's bank borrowing stay structurally elevated.
WATCH
- ◆Fresh NBR monthly collection against the Tk 3.61tn YTD run-rate
- ◆Updated government bank borrowing past the Jun Tk 0.94tn print
- ◆Revenue measures — the green-chilli and tomato import-tax cut to 20.5%
RISK
- ▼Revenue shortfall widening the deficit and bank borrowing
- ▼Crowding-out of private credit as the state borrows
- ▼Import-tax cuts trimming NBR receipts further
Iran War & Oil
Brent at $95.40 keeps the energy import bill heavy for an oil buyer.
Brent Crude
Brent has round-tripped since early June, printing $95.40 on the 2 Sep point against $95.21 on 5 Jun, after swinging between $71.18 and $100.38.
Three months of volatility have left oil almost exactly where it started in June, near the range top.
Treasury: budget the import bill at $90-plus Brent, not a pullback — the risk skews to a break toward the $100 high on escalation.
WATCH
- ◆Brent direction off the $95.40 level toward the $100 range top
- ◆Pass-through to domestic fuel and LNG import costs
- ◆Any Iran-conflict escalation reopening the supply premium
RISK
- ▼Oil breaking above $100 widening the import bill
- ▼Higher energy costs feeding non-food inflation
- ▼Margin compression on power and manufacturing borrowers
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