> If one currency has 10% inflation and another has 1%, the second countries bonds at 5% will have a higher real return than the first It's not how it works. I

> If one currency has 10% inflation and another has 1%, the second countries bonds at 5% will have a higher real return than the first It's not how it works. If both currency maintain change parity over time, then the inflation rate in one country compared to the other is irrelevant. “Real” (inflation adjusted) numbers make sense for consumers and local governments, but from an investing standpoint, the only thing that matters is the variation on FX rate. And unlike what the myth of “inflation is the loss of value of a currency” says, those are actually very loosely correlated (and it tends to be anti correlated during inflation spikes due to central banks' interests rates).