Headlines
Fuel pass-through is broadening; inflation-relapse risk is back on the desk.
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 funding easy with call money below the policy rate.
FX Reserves
Gross reserves climbed to $37.35bn as of the Aug 2026 print, up from $33.19bn last December and near the $37.58bn series peak.
Reserves have rebuilt roughly $4.2bn since the December 2025 trough of $33.19bn, a nine-month recovery.
Treasury: import cover holds near five months; watch whether the Sep print sustains the build above $37bn.
WATCH
- ◆overnight call money holding below the 9.50% repo
- ◆reserve build sustaining above $37bn into the Sep print
- ◆the corridor stance at the next MPS
RISK
- ▼fuel-driven inflation forcing the corridor back up
- ▼call money spiking on a quarter-end liquidity squeeze
Banking
Asset quality stuck at stress levels; Q2 NPLs near a third of loans.
Overnight Money Market
Overnight rates fell hard: DOMMR to 8.85% and BOFR (Bangladesh Overnight Financing Rate) to 8.81% by 21 Sep, both from above 10% in mid-April.
A drop of roughly 124bp since 15 April, with DOMMR now near its 8.67% series low.
Treasury: cheaper overnight funding eases carry, but a falling curve squeezes net interest margins on floating-rate books; watch quarter-end call money.
WATCH
- ◆the Q3 2026 NPL print for direction off 32.78%
- ◆any recapitalisation move for the state-owned banks
- ◆a CAR refresh against the four-quarter-old 1.56% read
RISK
- ▼provisioning shortfall widening as NPLs stay near a third of loans
- ▼capital erosion at the state banks feeding systemic tail risk
The system's headline problem has not moved: NPLs were 32.78% of loans in the Q2 2026 print, with the bulk of the bad-loan stock sitting in five state-owned commercial banks. That concentration matters more than the aggregate, because system solvency then rests on a small set of balance sheets rather than being spread across the sector. Our latest CAR read is 1.56%, from Q3 2025 and now four quarters old, so the desk is pricing asset-quality risk without a current read on the cushion meant to absorb it. Overnight funding has eased in the meantime — DOMMR (Dhaka Overnight Money Market Rate) at 8.85% on 21 Sep against 10.09% in mid-April — which lowers the carry cost of holding these assets but does nothing for recoverability. Stay defensive on state-bank exposure until fresher CAR data lands.
FX & External
Taka stable, reserves firm; the June trade gap the standing external drag.
External Flow Balance
Exports reached $4.20bn by the Jun 2026 print, up from $3.35bn a year earlier; imports ran at $7.51bn, keeping the monthly trade gap wide.
Imports at $7.51bn mark the series high across 24 months; exports remain below their $4.78bn peak.
Treasury: the import line, not exports, drives the gap; watch fuel-import cost as Brent holds near $96 into the next print.
WATCH
- ◆the July–August export prints to confirm the June run-rate
- ◆reserve build holding above $37bn into the Sep print
- ◆USD/BDT stability around 122.7 as the trade gap persists
RISK
- ▼a fuel-import bill widening the gap as Brent holds near $96
- ▼a stale trade picture masking a turn — June is the latest print
DSE Markets
Rangebound and thin; breadth soft with 254 decliners against 100 gainers.
DSEX Index
DSEX closed at 5,550 on 21 Sep, up from 5,337 a year earlier but below its 5,926 high; it has ranged 4,703–5,926 over 12 months.
Up roughly 4% over the year from 5,337 on 22 Sep 2025, still short of the 5,926 12-month peak.
Treasury: falling yields argue for an equity re-rating, but watch turnover and breadth before rotating from fixed income into the index.
WATCH
- ◆turnover reclaiming BDT 1,000cr to confirm any breakout
- ◆breadth turning positive after the 254:100 down day
- ◆whether falling yields start rotating money into equities
RISK
- ▼fuel-driven inflation lifting yields and stalling the re-rating
- ▼thin turnover leaving the index exposed to sharp single-session drops
The equity market is caught between two forces. The risk-free rate has fallen sharply — 364d T-bill cut-offs to 8.47% from 10.09% in July, the 10y govt bond at 8.54% — which lowers the discount rate on equity cash flows and should support valuations. Yet DSEX eased 0.75% to 5,550 on 21 Sep with breadth firmly negative (254 decliners to 100 advancers) and turnover thin at BDT 789cr, a sign money is not yet rotating out of fixed income into stocks. The missing ingredient is conviction: the fuel-price hike now feeding transport and freight costs has revived inflation-relapse fears, and until that pass-through is contained the market will not price the lower curve as durable. The desk stays neutral on the index — the valuation case from falling yields is real, but it needs turnover confirmation before adding beta.
T-Bonds & T-Bills
The whole curve has repriced down some 150bp since July's auctions.
BD Govt Yield Ladder
T-bill cut-offs fell across the board by the Sep 2026 print — 364d to 8.47% from 10.09% in July, 91d to 8.32%, 182d to 8.45%.
Every tenor is at its low over the three-month window, the 10y down to 8.54% from 10.24% in July.
Treasury: cheaper government funding, but thinner carry on new paper; watch the next auction and fuel inflation for a curve reversal.
WATCH
- ◆the next T-bill auction to see if cut-offs stabilise below 8.5%
- ◆10y demand at these levels after the 150bp rally
- ◆whether fuel inflation forces yields back up
RISK
- ▼a fuel-driven inflation relapse repricing the curve higher
- ▼mark-to-market swings on bank bond books if yields snap back
The government curve has repriced lower across every tenor since July. At the short end, T-bill cut-offs have fallen roughly 150bp — the 364d to 8.47% from 10.09%, the 182d to 8.45% from 9.99%, the 91d to 8.32% from 9.79% — and the long end moved with it, the 10y to 8.54% from 10.24% and the 15y and 20y back near 9.1% from above 10.3%. The driver is liquidity, not a formal easing: overnight call money at 8.9% and an unchanged corridor have pulled auction yields down without a policy cut. For bank treasury books the move cuts both ways — existing holdings mark up as yields fall, but reinvestment carry thins and the pull to lengthen duration rises just as fuel-price inflation threatens to reverse it. The desk would take profit on the long end into strength rather than chase the rally.
Macro & Inflation
Disinflation is slow and fuel hikes now threaten to reverse it.
CPI Trend
The 12-month average CPI eased to 8.66% as of the Jul 2026 print, down from 9.77% a year earlier, holding just above its 8.59% series low.
This is the lowest since May 2026 (8.6% then), but the fall has nearly stalled near the 8.59% floor.
ALCO: the real policy rate stays around 1.24%; watch fuel pass-through, which could halt disinflation into the autumn prints.
WATCH
- ◆the August CPI detail for fuel pass-through into September prints
- ◆private credit off its 4.98% low as funding cheapens
- ◆REER — last read 102.78 in March — when it refreshes
RISK
- ▼fuel-driven cost spikes reversing the disinflation trend
- ▼credit growth staying near 5% as the real economy underperforms
Remittance
August remittance flash at $2.97bn holds the inflow well above last year.
Remittance Inflow
Monthly remittance was $2.86bn as of the Jul 2026 print, up from $2.42bn a year earlier; the 12-month range ran $2.42–3.76bn.
The July reading sits near the middle of the 12-month range, up from the $2.42bn August 2025 low.
Treasury: sustained inflows underpin the reserve build and stable taka; watch whether the finalised August figure confirms the $2.97bn flash.
WATCH
- ◆the finalised August number against the $2.97bn flash
- ◆remittance holding above $2.8bn into the September print
- ◆channel mix as the taka stays near 122.7
RISK
- ▼a downward revision to the provisional August flash
- ▼the flash overstating the trend if September softens
Fiscal
Revenue flat and development spending near a standstill early in FY27.
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.
That is up about 5.5% year-on-year from the Oct 2024 reading, though well below the BDT 52,720cr series peak.
Fiscal: revenue momentum is modest against target; watch monthly collection to close the gap left by slow ADP spending.
WATCH
- ◆the first NBR monthly print of FY27 to confirm the run-rate
- ◆ADP execution picking up from the 1.85% two-month low
- ◆the government's borrowing mix as revenue lags
RISK
- ▼a revenue shortfall widening the deficit and lifting bank borrowing
- ▼under-spending on ADP dragging on FY27 growth
Iran War & Oil
Brent near $96 feeds the fuel-cost pass-through now hitting the economy.
Brent Crude
Brent climbed to $96.36 by the 21 Sep print from $76.78 in late June, having swung between $71.18 and $108.35 over the period.
That is up about 25% since 24 June, though still below the $108.35 peak reached earlier in the run.
Risk: higher crude feeds the fuel-price hike and import bill; watch H2 energy-importer receivables and the next CPI print.
WATCH
- ◆Brent holding above $95 into the next refi cycle
- ◆further domestic fuel-price adjustments if oil stays elevated
- ◆the September CPI for oil pass-through
RISK
- ▼a sustained oil spike widening the trade gap and import bill
- ▼second-round inflation from fuel feeding into core prices
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