Headlines
Inflation easing and rates falling; the LDC clock still runs.
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)
Rates on hold; the corridor is steady as liquidity eases.
FX Reserves
Gross reserves at $36.42bn on the Jul 2026 print, up from $31.09bn in Nov 2025 but off the $37.58bn series high.
Net reserves $31.60bn, up from $26.40bn last Nov — the buffer has rebuilt but plateaued.
Treasury: the rebuild has stalled near $36bn — watch the next monthly print for whether the buffer resumes climbing.
WATCH
- ◆Whether call money holds below the 9.50% repo — the liquidity tell
- ◆The next T-bill auction cut-offs for the pace of the rate slide
- ◆The reserve refresh after the 31 Jul print
RISK
- ▼A liquidity reversal pushing call money back above the 9.50% repo
- ▼Reserve drawdown if the import bill outpaces remittance and exports
Banking
Asset quality remains distressed on stale Q2 data; funding costs easing.
Overnight Money Market
BOFR eased to 9.22% and DOMMR to 9.13% by 7 Sep, both down from above 10% in mid-April — interbank funding steadily cheaper.
Both sit at series lows since the 15 Apr 2026 start (BOFR 10.42%, DOMMR 10.09% then).
Treasury: cheaper overnight funding supports carry, but does not offset the asset-quality drag on the credit book.
WATCH
- ◆The next quarterly NPL disclosure for direction off 32.78%
- ◆A refreshed CAR print — the Q3 2025 read is now the binding uncertainty
- ◆BOFR and DOMMR (Dhaka Overnight Money Market Rate) for the funding trend
RISK
- ▼Provisioning shortfall against the 32.78% NPL stock eroding capital further
- ▼Concentration of bad loans in a small number of state balance sheets
The banking book carries two stresses captured at different vintages. Asset quality, last measured at a 32.78% NPL ratio for Q2 2026, is the structural problem: a bad-loan stock that size demands provisioning the sector's thin capital cannot easily fund, and the 1.56% CAR — now a Q3 2025 figure — frames how little cushion sits behind it. The funding side, by contrast, has loosened. BOFR has fallen to 9.22% on 7 Sep from 10.42% in April, and DOMMR to 9.13% from just above 10%, so the cost of carrying assets has come down while their quality has not. For the desk, that gap argues for defensive positioning on the weakest lenders and selective use of the cheaper funding — not for reading the credit cycle as turned.
FX & External
Taka stable and reserves holding; the trade gap read is stale.
External Flow Balance
Exports reached $4.20bn in Jun 2026, up from $3.35bn a year earlier, but imports hit a series-high $7.51bn — the gap keeps widening.
Imports at their 24-month series high ($7.51bn); exports still below the $4.78bn peak in the window.
Treasury: the widening import bill pressures reserves and the peg — watch the next trade and reserve prints.
WATCH
- ◆The reserve refresh after the 31 Jul print
- ◆Export momentum into the next monthly release
- ◆USD/BDT holding the 122–123 range
RISK
- ▼The import bill outpacing export and remittance inflows, widening the gap
- ▼Reserve cover erosion if the trade gap persists near $3bn a month
DSE Markets
Listless tape; rates fall but liquidity has not rotated into equities.
DSEX Index
The DSEX ended at 5,567 on 7 Sep, essentially flat over 12 months (5,628 a year ago), after ranging between 4,703 and 5,926.
A year of net drift — the index sits ~6% below the 5,926 window high, above the 4,703 low.
Equity desk: falling yields have not yet drawn flows in — watch turnover for the first sign of rotation.
WATCH
- ◆Turnover — a sustained lift above Tk1,000cr would signal real participation
- ◆Whether falling T-bill yields pull liquidity toward equities
- ◆The 5,558 recent low as near-term support
RISK
- ▼Thin turnover leaving the index vulnerable to sharp single-day moves
- ▼Rate relief bypassing equities if credit demand stays weak
The equity market is not participating in the rate relief around it. The DSEX closed at 5,567 on 7 Sep, roughly 1% below where it traded a year ago, on turnover of just Tk571cr — a level that signals sidelined money rather than active selling. That reluctance comes even as the T-bill curve has repriced sharply lower: the 91-day cut-off fell to 8.59% from 9.79% in July, and headline inflation eased to a 10-month low of 8.26% in August. In a working transmission, cheaper risk-free yields push allocators toward equities; here they have not, which points to a demand problem — weak private credit growth and asset-quality stress — rather than a rates problem. For the desk, that argues for staying selective: the macro tailwind is real, but the flow to confirm it is absent, and thin turnover makes any rally fragile until participation returns.
T-Bonds & T-Bills
The short end has repriced sharply lower with inflation cooling.
BD Govt Yield Ladder
T-bill cut-offs have fallen across the board — the 364-day from 10.09% (Jul) to 8.73%, the 91-day from 9.79% to 8.59% by Sep 2026.
The front has led the move, with the long end still lagging: the 10-year has dropped from 10.24% in Jul to 9.23%, its series low.
Treasury: bull-flattening argues for selective duration extension before the long end fully catches the front.
WATCH
- ◆The next weekly bond quotes to confirm the long end follows the front lower
- ◆Auction bid-cover as yields fall — demand at the new lower cut-offs
- ◆The 91-day to 364-day spread for further flattening
RISK
- ▼A reversal if government borrowing needs push supply up
- ▼Duration mispricing if the long end lags the front for longer
The government yield curve has repriced lower with unusual speed. On the monthly series, the 91-day cut-off has fallen from 9.79% in July to 8.59% in September, the 364-day from 10.09% to 8.73%, and the 10-year from 10.24% to 9.23% — a bull-flattening of well over 100bp at the short end in two months. The move tracks the inflation data: the August print at a 10-month low of 8.26% pushes the real policy rate further into positive territory and gives the market conviction that the easing cycle has room to run. For a treasury book, the signal is to extend duration selectively before the long end fully catches the front — the 10-year at 9.23% still carries a term premium the flattening short end implies should compress. The risk to that trade is supply: a heavier government borrowing calendar would slow the rally.
Macro & Inflation
Disinflation underway yet credit demand is soft; the transmission is one-sided.
CPI Trend
12-month CPI eased to 8.66% by Jul 2026, down from 9.77% a year earlier; food inflation cooled to 8.6% from 11.36% at the series start.
Disinflation persists even as M2 growth runs at its highest since Sep 2021 (11.2% then) — ample liquidity, cooling prices.
ALCO: cooling inflation and positive real rates support holding the policy rate; watch the August CPI components.
WATCH
- ◆The August CPI detail once the components are published
- ◆Private credit growth for any turn above 5% — the demand signal
- ◆REER (Real Effective Exchange Rate) on the next refresh; the Mar 2026 read is stale
RISK
- ▼Non-food inflation at 9.28% proving sticky and capping the easing
- ▼Private credit stuck near 5%, signalling a stalled investment cycle
- ▼REER strength eroding export competitiveness if the taka holds firm
Remittance
Inflows firmed to $2.97bn in August, supporting the external buffer.
Remittance Inflow
Monthly remittance was $2.86bn on the Jul 2026 print, up from $2.42bn a year earlier, after peaking at $3.76bn in the window.
Off the $3.76bn window peak; inflows have climbed from the $2.42bn low of Aug 2025.
Treasury: the reserve rebuild and the peg both lean on these inflows — watch whether the run holds above $2.8bn.
WATCH
- ◆The BB final August figure against the $2.97bn provisional
- ◆Whether inflows hold above $2.8bn through the autumn
- ◆The spread between formal and informal channels
RISK
- ▼A pullback to the $2.8bn range narrowing the external cushion
- ▼The provisional figure being revised down on final BB data
Fiscal
Revenue collection ticked up; the bank-borrowing read is a quarter old.
NBR Tax Revenue
Monthly NBR revenue was BDT 28,027cr as of the Oct 2025 print, up from BDT 26,555cr a year earlier but well below the BDT 52,720cr peak.
The series runs from BDT 22,005cr in Jul 2023; June-quarter months spike (BDT 52,720cr peak) on year-end collection.
Fiscal: soft monthly intake keeps pressure on bank borrowing to fund the deficit.
WATCH
- ◆The next NBR monthly collection update against the fiscal-year run-rate
- ◆A refreshed government borrowing figure — the Jun 2026 read is stale
- ◆Any shift in the borrowing mix between banks and savings instruments
RISK
- ▼A revenue shortfall forcing heavier bank borrowing and crowding out private credit
- ▼Financing pressure feeding back into the T-bill supply calendar
Iran War & Oil
Crude elevated near $96, keeping the energy import bill under pressure.
Brent Crude
Brent was $96.28/bbl as of the 7 Sep print, up from $92.40 in mid-June, after swinging between $71.18 and $100.38 in the window.
Off the $100.38 window high but well above the $71.18 low reached since the 10 Jun 2026 start.
Treasury: mid-90s crude sustains import-cost pressure — watch H2 energy-linked receivables and the trade gap.
WATCH
- ◆Brent holding below the $100 window high
- ◆Any escalation premium re-entering the price
- ◆Pass-through to the energy import bill and the trade gap
RISK
- ▼A supply-shock spike lifting the import bill and pressuring reserves
- ▼Sustained mid-90s crude keeping the current-account gap wide
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