Currency carry in emerging markets is real yield — but real risk follows right behind. Desk note: High nominal interest rates in EM often reflect inflation expectations and currency depreciation risk. The yield differential compensates for a probable weakening of the local currency. Why investors care: That is why local currency EM bonds can lose in dollar terms even when nominal coupons look generous. Translate it into behavior: A bond yielding 12% in local currency that depreciates 10% against the dollar delivers roughly 2% in dollar terms — no longer an extraordinary return. Where people usually get tripped up: The mistake is treating the nominal yield spread as free return without hedging or expecting the currency adjustment. Keep this nearby on the next review: On the next portfolio review, separate what feels urgent from what is structurally important. The point is not to memorize the label. The point is to know what variable is actually doing the work.