Thanks David - you are right! I had DR set to AUTO and changing it to 100 lets Auto ISO select 200.
That made me confused about what the DR setting is actually doing, The manual says to use higher values to reduce loss of detail in highlights and shadows. i.e. high values give greater dynamic range. Increasing ISO should reduce dynamic range so why would the DR option to increase dynamic range require high ISO? I found this description of what Fujifilm DR settings are doing: https://www.dpreview.com/articles/5426898916/ins-and-outs-of-iso-where-iso-gets-complex. What is surprising is this suggests that the greatest dynamic range comes from DR 400 and ISO 800. i.e. there is more dynamic range as ISO increases from 200 to 800.