According to the latest quarterly assessment released by Bangladesh Bank, the national economy maintained a broadly stable trajectory throughout the first quarter of the 2026 fiscal year (Q1FY26). This resilience was underpinned by a triad of factors: a stabilising exchange rate, a robust external sector, and a steadfast commitment to rigorous policy tightening.
The central bank’s report, published yesterday, suggests that the strategic interplay between prudent monetary and fiscal measures has been instrumental in restoring macroeconomic stability. This progress occurred despite the shadow of persistent structural vulnerabilities within the domestic banking sector.
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Resilience in the External Sector
A primary highlight of the report is the notable improvement in external dynamics. While the trade deficit widened to $5.7 billion during the quarter, the current account deficit remained remarkably modest at $0.597 billion. This stability was largely facilitated by consistent remittance inflows from the expatriate workforce.
The financial account delivered a standout performance, recording net inflows of $1.7 billion, which comfortably offset the current account gap. Furthermore, net medium- and long-term external loans reached $1.0 billion, signalling that Bangladesh retains healthy access to international credit markets.
Exchange Rate and Reserves
Following the shift to a market-based exchange rate regime, the Taka exhibited newfound stability against the US Dollar. Trading remained within a narrow band of Tk 121.80 to Tk 122.62 throughout the quarter. Gross official reserves witnessed only a marginal dip, settling at $31.43 billion ($26.60 billion under the BPM6 methodology), a decline attributed primarily to valuation effects rather than systemic depletion.
Economic Indicators: Q1FY26 Snapshot
| Indicator | Performance / Value | Economic Context |
| Exchange Rate | Tk 121.80 – 122.62 | Stabilised via market-based regime. |
| Gross Reserves | $31.43 Billion | Resilient despite valuation shifts. |
| Policy Rate | 10% | Maintained contractionary stance. |
| Financial Account | $1.7 Billion (Net Inflow) | Offset the current account gap. |
| NPL Ratio | 35.73% | High stress in the banking sector. |
Inflationary Pressures and Fiscal Discipline
Inflationary trends began to soften during the quarter, aided by sustained monetary tightening. While food prices experienced occasional spikes, the broader outlook remains contained, bolstered by stable exchange rates and easing global commodity costs.
On the policy front, Bangladesh Bank has remained hawkish, holding the policy rate at 10%. Complementing this, fiscal consolidation has strengthened; revenue collection showed robust growth, while government expenditure rose at a more measured pace. Notably, the government recorded a fiscal surplus in Q1FY26, opting for net repayments rather than seeking new domestic or foreign borrowing.
The Banking Sector Bottleneck
The report does not shy away from the sector’s primary weakness: the banking industry. The gross non-performing loan (NPL) ratio surged to 35.73% by September 2025, severely impacting profitability and capital adequacy. The central bank emphasised that ongoing governance reforms and corrective measures are being fast-tracked to mitigate these risks.
In summary, while risks regarding global trade tensions and domestic political shifts persist, the Bangladesh Bank maintains that the economy has weathered recent structural shocks with commendable fortitude.