Headlines
Banking-sector repair costs crowd the leads; RMG the lone tailwind.
The day's leads converge on the cost of repairing the banking system. Bangladesh Bank's reported estimate puts the annual recapitalisation bill for the weak banks near Tk 600bn and lands it on the government, and the IMF is reportedly seeking a repair deadline as a condition of new lending. That meets a 32.78% gross NPL ratio on the Q2 2026 print and a 1.56% Capital Adequacy Ratio last read in Q3 2025: the capital gap is now fiscal, not only prudential. RMG exports up 6.1% in the first quarter are the clearest tailwind in the set, while a Chattogram customs shortfall and falling subsidised-food distribution read the other way. For the desk, the figure to track is how the recap bill is financed — bank-funded repair feeds straight into government borrowing and the squeeze on private credit.
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 steady; call money near the SDF floor signals ample liquidity.
FX Reserves
Gross reserves climbed from $33.19bn in Dec 2025 to $37.35bn by the Aug 2026 print, near the series high of $37.58bn.
Reserves have risen about $4.2bn since the Dec 2025 series start, holding just below the Aug 2026 high.
Treasury: the external buffer is building, but the Aug print is six weeks stale — watch for the next monthly refresh before sizing FX cover.
WATCH
- ◆Call-money fixings against the 7.5% SDF floor as a liquidity gauge
- ◆The monthly reserve refresh beyond the Aug 2026 print
- ◆Any corridor signal at the next MPS
RISK
- ▼A liquidity drain into H2 lifting call money toward the 11% SLF ceiling
- ▼Reserve-data staleness masking FX pressure behind the cover ratio
- ▼Recap-driven govt borrowing tightening interbank funding
The corridor has held since the 30 Jul cut: SDF at 7.5%, the policy rate at 9.5%, SLF at 11%. Overnight call money at 7.69% on 10 Oct sits barely above the floor, which says the banking system is flush — banks are lending each other cash cheaply and the central bank is not having to inject liquidity. For a treasury desk that argues against any near-term squeeze in taka funding and keeps short-tenor FDR repricing benign. The complication is the recapitalisation bill now circulating: Bangladesh Bank's estimate that repairing the weak banks costs the government around Tk 600bn a year implies a larger state financing need, and if that is met through bank borrowing the current ease could tighten through H2. Reserves at $37.35bn on the Aug 2026 print anchor the external side, but that figure is six weeks old and the cover ratio behind it should be treated as provisional.
Banking
On the Q2 print, one in three taka of loans is non-performing.
Overnight Money Market
Overnight money-market rates (DOMMR, BOFR) fell from ~10.1% in mid-Apr to the 7.8% area by the 8 Oct print, a series low.
Both sit at their lowest since the 15 Apr 2026 series start, down from a 10.65% peak.
Treasury: overnight funding is cheap and ample, consistent with call money near the SDF floor — no near-term squeeze in taka liquidity.
WATCH
- ◆The Q3 2026 NPL disclosure for any further rise from 32.78%
- ◆Terms of any IMF deadline for fixing the weak banks
- ◆A refreshed CAR read to replace the Q3 2025 figure
RISK
- ▼Capital shortfalls at state-owned banks crystallising into a larger recap bill
- ▼Fresh provisioning drag on sector earnings as NPLs are recognised
- ▼IMF conditionality tightening the timeline for bank repair
Two numbers frame the sector, and both are dated: a 32.78% gross NPL ratio on the Q2 2026 print and a 1.56% CAR last seen in Q3 2025. Read together they describe a system carrying a very large stock of bad loans against a thin capital base, with the damage concentrated in a handful of state-owned banks rather than spread across the book. That concentration makes the repair bill a fiscal question as much as a prudential one: Bangladesh Bank's reported estimate puts the annual cost of recapitalising the weak banks near Tk 600bn, which lands on the government. The IMF's reported push for a deadline attaches a timeline to it. For the desk, credit growth stays constrained while capital is rebuilt, interbank limits to the weakest names warrant review, and the recap route — bonds or cash injection — will shape govt borrowing into 2027.
FX & External
Spot taka steady at 123.10; the reserve and export reads are weeks old.
External Flow Balance
Exports reached $4.20bn in the Jun 2026 print, up from $3.35bn a year earlier, while imports ran $6.78bn in Jul — the trade gap persists.
Exports are up roughly 25% on the Jun 2025 read ($3.35bn then); remittance $2.97bn on the Aug print.
Treasury: remittance and export inflows are cushioning the import bill, but the data lags — size FX cover off the next monthly prints.
WATCH
- ◆The monthly reserve refresh beyond the Aug 2026 print
- ◆September export figures to update the Jun 2026 read
- ◆USD/BDT drift from the 123.10 managed level
RISK
- ▼Stale reserve data masking FX pressure if import demand lifts
- ▼Gold at record levels inflating the headline reserve figure
- ▼Export softness on the next EPB print narrowing trade-gap funding
DSE Markets
DSEX edged up 0.21% on light turnover; advancers led decliners 171 to 150.
DSEX Index
DSEX closed at 5,475.58 on 8 Oct, up from 5,202.46 a year earlier — a 5.3% annual gain, but off the 5,926 peak in the window.
Up about 5.3% on the 12 Oct 2025 level (5,202 then), mid-range between the 4,703 low and 5,926 high.
Equity desk: the index is range-bound on thin turnover — watch for a breakout above 5,926 or a break below the 5,400 area.
WATCH
- ◆Turnover recovery above the Tk 500cr area as a conviction signal
- ◆A DSEX test of the 5,926 one-year high
- ◆Breadth holding positive into the next sessions
RISK
- ▼Thin liquidity amplifying moves on low turnover
- ▼Rate-cut optimism fading if the corridor holds
- ▼Rotation out of bank names on the recap overhang
T-Bonds & T-Bills
Short-tenor yields drifted lower; the 91d cut-off eased to 8.13%.
BD Govt Yield Ladder
The 91-day T-Bill cut-off fell from 8.73% in Aug 2026 to 8.13% by the Oct print, and the 364-day eased from 8.89% to 8.59%.
Both the three-month and one-year bills are at their lowest in the three-print window since Aug 2026.
Treasury: the front of the curve is cheapening govt funding — expect roll yields to keep drifting lower unless borrowing picks up into H2.
WATCH
- ◆The next T-Bill auction for continuation of the easing in cut-offs
- ◆A refreshed long-bond quote to update the Sep reads
- ◆The spread between the 364-day bill and the 10-year
RISK
- ▼A govt borrowing ramp lifting cut-offs if the recap bill is bond-funded
- ▼Curve steepening if the long end reprices higher
- ▼Liquidity-driven yield compression reversing
Macro & Inflation
On the Aug print, CPI eased to 8.66% while private credit crawls at 4.98%.
CPI Trend
The 12-month average CPI fell from 9.97% at the Sep 2024 series start to 8.66% latest, with food P-to-P off its 13.8% peak.
Lowest since May 2026 (8.6% then); the headline measure has come down steadily from a 10.34% series high.
Treasury: disinflation keeps the real policy rate positive at 1.24% — expect the MPC to hold rather than cut at the next MPS.
WATCH
- ◆September CPI for continuation of the disinflation from 8.66%
- ◆Private credit growth off the 4.98% Aug read
- ◆The real policy rate as CPI falls toward the 9.5% repo
RISK
- ▼Non-food inflation staying sticky above 9% despite food easing
- ▼Credit growth too weak to support activity
- ▼M2 at 11.76% feeding back into prices if it accelerates
Remittance
September remittance held near $2.97bn on the provisional flash, up on last year.
Remittance Inflow
Monthly remittance was $2,967.53mn in the Aug 2026 print, up from $2,685.60mn a year earlier, within a 12-month range of $2,562mn to $3,755mn.
Up about 10.5% on the Sep 2025 level ($2,685.60mn then), though below the $3,755mn peak in the window.
Treasury: a steady 10%-plus YoY remittance stream cushions the import bill and reserves — a reliable FX inflow to net against trade-payment demand.
WATCH
- ◆Confirmation of the September flash against the final print
- ◆Remittance holding in the $2.5bn-$3bn band into the festival cycle
- ◆The formal-channel share versus hundi flows
RISK
- ▼Downward revision of the provisional September flash
- ▼A seasonal fade after the festival remittance bump
- ▼Exchange-rate incentive changes diverting flows to informal channels
Fiscal
NBR collection sits at Tk 4.15tn YTD; the borrowing read is from June.
NBR Tax Revenue
Monthly NBR revenue was Tk 28,027cr in the Oct 2025 print, up from Tk 26,555cr a year earlier, well off the Tk 52,720cr series peak.
Up about 5.5% on the Oct 2024 read (Tk 26,555cr then); the series runs from Jul 2023.
Fiscal watch: monthly revenue is growing only mid-single-digits, keeping the budget reliant on bank borrowing — relevant if the bank recap adds to financing needs.
WATCH
- ◆Monthly NBR collection updates against the FY target
- ◆A refreshed govt borrowing figure beyond the Jun 2026 print
- ◆How the Tk 600bn bank recap bill is financed — borrowing or bonds
RISK
- ▼A revenue shortfall widening the deficit and the bank-borrowing need
- ▼Recap financing crowding out private credit
- ▼Customs underperformance against target persisting into H2
Iran War & Oil
Brent at $104.72 and WTI at $91.85 keep energy-import costs high.
Brent Crude
Brent has climbed from $78.46/bbl in mid-Jul 2026 to $104.72/bbl by the 9 Oct print, a 33% run off the series low.
Crude sits just below its $108.35 series peak, up from $78.34 at the 13 Jul 2026 start.
Credit: energy-importer lines face a higher refi bill — watch H2 receivables for 60-90 DPD slippage as crude holds in the $100s.
WATCH
- ◆Brent sustaining above $100 into the next import-payment cycle
- ◆Pass-through to administered fuel prices and the subsidy bill
- ◆60-90 Days Past Due (DPD) moves on energy-sector receivables
RISK
- ▼Higher oil widening the import bill and pressuring reserves
- ▼Fuel-subsidy drag on the fiscal deficit
- ▼Energy-sector credit stress if crude stays in the $100s
Every morning.
Free.