Foreign bond return when the foreign country's economic activity improves

Foreign bond return when the foreign country's economic activity improves

A foreign country's economic activity		improves
Real interest rate		↑
Bond price in the foreign nation		↓
Foreign currency (against investor's home/base currency)		↑(appreciation)
Total P&L on the bond in the investor's home/base currency		FC appreciation - bond price return (*)

(*) The increase in rates depresses bond prices, but the appreciation of the foreign currency will offset the loss on the bond.