Equation (10.6) states that a higher domestic interest rate leads to higher demand for domestic bonds; an expected increase in the exchange rate or expected depreciation of the domestic currency shifts the demand for assets from domestic bonds to foreign bonds, since foreign bonds become more attractive pending the depreciation of the domestic currency; and rather explicitly, a higher level of wealth boosts demand for bonds. Finally, the function for the demand for foreign bonds by private investors and its relationship with the three variables are set as follows