The incident took place in Ward number 7 of Boro Mainka area, our correspondent reported.
One of the deceased was identified as Hasnain, 18. The other victim is the balloon vendor whose identity was not immediately provided by police.
It was not immediately clear what caused the explosion.
In Bangladesh, the use of substandard gas cylinders is quite common, mainly because of lax monitoring.
Incidents of gas cylinder explosions are often reported. Last year, five children died and 17 others were injured in a similar blast in Dhaka.