Headlines
Governance drag and weak credit appetite run through today's banking headlines.
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)
Rate corridor steady; call money easing points to ample interbank liquidity.
FX Reserves
Gross reserves climbed to $37.35bn as of the Aug 2026 print from $33.19bn in Dec 2025, near the series high of $37.58bn.
Up over $4bn since the Dec 2025 print; net reserves now $32.44bn on the Aug read.
Treasury: the reserve build underpins the import-cover buffer; watch the Sep print for continuation.
WATCH
- ◆Call money drift toward the 7.5% SDF floor as liquidity stays loose
- ◆Sep reserve print due for the import-cover update
- ◆Any MPS signal on the next rate step
RISK
- ▼Loose liquidity reviving credit-fuelled import demand and pressuring the FX front
- ▼Reserve build stalling if remittance momentum fades into Q4
Banking
NPLs near a third of loans on the Q2 2026 print; capital data a year old.
Overnight Money Market
DOMMR eased from 10.09% in mid-April to 8.44% on the 1 Oct print; BOFR fell to 8.35%, both at window lows.
Down about 165bp since the 15 Apr 2026 series start, tracking the policy easing since the 30 Jul cut.
Treasury: cheaper overnight carry supports margins, but the NPL stock, not funding cost, drives provisioning.
WATCH
- ◆Q3 2026 NPL disclosure for whether the ratio has turned
- ◆A refreshed CAR print to replace the year-old Q3 2025 read
- ◆DOMMR holding near the 8.44% window low
RISK
- ▼Concentration of bad loans in SCBs keeping system tail risk high
- ▼Stale capital data masking provisioning shortfalls against the NPL stock
The banking book splits into a fast-moving signal and a slow one. On the stock side, the NPL ratio was 32.78% on the Q2 2026 print — close to a third of system loans — and the burden sits disproportionately with a small group of state-owned commercial banks, concentrating the system's tail risk in a few balance sheets. On the price side, funding has turned cheaper: the Dhaka Overnight Money Market Rate fell to 8.44% and the Bangladesh Overnight Financing Rate (BOFR) to 8.35% on the 1 Oct print, both at lows since mid-April. Cheaper overnight money eases the cost of carrying problem assets but does nothing for recovery. With the CAR read frozen at 1.56% for Q3 2025, the desk is pricing credit against a capital number over a year old; counterparty lines to the weaker SCBs warrant tighter review until a fresh print lands.
FX & External
Taka stable at 123; reserve cover near 5.5 months on the Aug print.
External Flow Balance
Exports hit $4.20bn in the Jun 2026 print, up from $3.35bn a year earlier; imports ran $6.78bn in Jul, a wide trade gap.
Exports up roughly 25% YoY on the Jun read; imports above their $6.27bn level of a year earlier.
Treasury: export momentum and remittance near $2.86bn in Jul feed the reserve build, but the import bill caps net FX accrual.
WATCH
- ◆Jul–Aug export prints to confirm the June momentum
- ◆USD/BDT drift as interbank liquidity stays loose
- ◆Gold's bid as a swing factor in reserve valuation
RISK
- ▼Import bill reaccelerating — $6.78bn in the Jul print — eroding the trade gap
- ▼Stale export data masking a turn if orders soften into Q4
DSE Markets
DSEX slips to a 5-session low; breadth and turnover both weak.
DSEX Index
DSEX at 5,531.65 as of the 1 Oct print, up from 5,447.63 a year ago but well below the 5,926 window high.
A 5-session low (5,494.07 on 16 Sep the last lower close), roughly flat over the past year.
Treasury: equities range-bound well off the floor despite falling yields; watch turnover for a rotation signal before adding risk.
WATCH
- ◆Turnover rebuilding above the Tk 1,000cr mark as a participation signal
- ◆Whether falling T-bill yields trigger rotation out of fixed income into equities
- ◆DSEX holding the 16 Sep 5,494.07 support
RISK
- ▼Thin turnover amplifying downside on any forced selling
- ▼Negative breadth broadening beyond the index heavyweights
The equity tape is not responding to cheaper money. The DSEX closed at 5,531.65 on 1 Oct, a 5-session low, with 242 decliners to 85 advancers and turnover of just Tk 723cr. Against that, the rate backdrop has eased hard: the 364-day T-bill cut off at 8.95% on 28 Sep, down from 10.09% in July, and overnight money sits at 8.33%. Textbook transmission says lower yields should lift the discount on equity cash flows and push savers out of fixed income into stocks — but turnover near Tk 700cr says that rotation has not started. The index holds a wide range between its 4,702 low and 5,926 high of the past year, and today sits in the upper middle of it. Until turnover rebuilds, the desk should treat rallies as liquidity-starved and size equity exposure for a market that can gap on thin volume.
T-Bonds & T-Bills
Bill cut-offs well below July; the one-year nudged up at the 28 Sep auction.
BD Govt Yield Ladder
Across the monthly curve the 91-day yield fell from 9.79% to 8.28% and the 10-year from 10.24% to 8.54% between the Jul and Sep reads.
The steepest easing leg since the 30 Jul policy cut; the one-year ticked back to 8.95% by the Sep read.
ALCO: most of the belly rally is banked; favor the long end, where yields have fallen least, over a basing short end.
WATCH
- ◆The next T-bill auction for whether the 364d holds above 8.9%
- ◆A fresh bond print to replace the mid-September reads
- ◆Curve shape — the front hump versus the 15–20y segment near 9.35%
RISK
- ▼Short-end yields re-steepening if government borrowing picks up into H2
- ▼Thin secondary liquidity leaving the stale bond marks unreliable for MTM
The government yield curve has repriced sharply lower since mid-year. On the monthly series the 91-day fell from 9.79% in July to 8.28% by the September read, the 364-day from 10.09% to 8.95%, and the 10-year from 10.24% to 8.54% — roughly 150bp off at the belly. Two details complicate the easy read. The 364-day cut-off rose about 48bp at the 28 Sep auction, hinting the short end has found a floor as the government's funding need meets falling policy rates. And the curve is now humped: the one-year bill at 8.95% sits above the 5- and 10-year bonds near 8.5–8.65%, with the 15–20y segment near 9.35%. For the desk, most of the belly rally is already banked; the risk-reward now favors the long end, where yields have fallen least, over a short end that may be basing.
Macro & Inflation
Inflation easing off the top; private credit still soft on the Aug print.
CPI Trend
The 12-month average CPI eased to 8.66% by the Jul 2026 read from 9.77% a year earlier; point-to-point food 8.6%, non-food 9.61% on the Jun read.
The 8.66% average is the lowest since May 2026 (8.6% then), off the 10.34% series peak.
ALCO: disinflation is grinding slowly on the headline; non-food stickiness keeps real rates thin and the MPC cautious on cuts.
WATCH
- ◆September CPI for whether non-food follows food lower
- ◆Private credit growth off its 4.98% Aug read as rates ease
- ◆M2 at 11.76% — highest since Jul 2021 — for pass-through to prices
RISK
- ▼Sticky 9.32% non-food inflation keeping the real rate thin if CPI reaccelerates
- ▼Weak private credit signalling soft investment demand into FY27
- ▼Fast M2 growth rekindling inflation if liquidity stays loose
Remittance
Remittance near $2.97bn on the September flash, still a reserve tailwind.
Remittance Inflow
Monthly remittance ran $2.86bn in the Jul 2026 print, up from $2.42bn a year earlier; the series peaked at $3.76bn.
The Jul read sits well above the $2.42bn of a year earlier but below the $3.76bn series peak.
Treasury: a firm remittance floor underpins the reserve build; the $2.97bn September flash, if confirmed, extends the run.
WATCH
- ◆The confirmed September figure versus the $2.97bn flash
- ◆Whether Eid-cycle momentum carries into October
- ◆Remittance's share of the reserve build as exports stay firm
RISK
- ▼Provisional flash revised lower on final reconciliation
- ▼Informal-channel leakage if the formal rate premium narrows
Fiscal
Fiscal reads trail the quarter; borrowing data last refreshed in June.
NBR Tax Revenue
Monthly NBR tax revenue was BDT 28,027cr in the Oct 2025 print, up from BDT 26,555cr a year earlier; the series peaked at BDT 52,720cr.
The latest plotted point is the Oct 2025 read; collection ranges from BDT 21,478cr to a BDT 52,720cr June peak.
Fiscal: a thin revenue pickup keeps the deficit leaning on bank borrowing, a watch item for private-credit crowding-out.
WATCH
- ◆A refreshed government borrowing figure to replace the June print
- ◆Monthly NBR revenue momentum into the FY27 collection target
- ◆Bank reliance for deficit financing as T-bill cut-offs ease
RISK
- ▼Revenue underrun forcing heavier bank borrowing and crowding out private credit
- ▼Stale fiscal data obscuring the real H1 financing gap
Iran War & Oil
Brent holds above $100, keeping the energy import bill elevated.
Brent Crude
Brent climbed from $71.67 in early July to $102.25 as of the 2 Oct print, a run of over 40%, though below the $108.35 window high.
Up from the $71.67 July low toward the $108.35 window high over roughly three months.
Treasury: $100+ crude lifts the import bill; watch energy-importer working-capital lines and the next import-cover print.
WATCH
- ◆Brent holding above $100 versus a retreat toward the July $71 base
- ◆LPG and fuel import financing demand as costs stay high
- ◆Pass-through to the next import-cover read
RISK
- ▼Sustained $100+ crude widening the import bill and eroding reserve gains
- ▼Energy-importer receivables stretching on higher input costs into H2
Every morning.
Free.