It's not because... (and they'd give me credit for the $3,500 difference)
A European investor paying 6500 Euros for a $10,000 bond that has a 4% coupon still earns 4%. I hope that's a little clearer.
As far as currency fluctuations, if I knew that, I'd be worth $1 billion, at least.
Let's think of this a different way . . .
In my example, a European investor who was looking to earn $400 in U.S. dollars was willing to pay $10,000 (in its Euro equivalent) five years ago to get that return. Today, he's only willing to pay $6,500 to get that same return. His "coupon" is still the same in both cases (4%), but the price (in his own currency) that he's willing to pay for that coupon is 35% lower today than it was five years ago.
As far as currency fluctuations, if I knew that, I'd be worth $1 billion, at least.
Not necessarily. And I think you're smarter than that.
If the U.S. government were a publicly-traded corporation, any smart investor would look at its balance sheet and determine that there are some serious bumps in the road ahead. THAT is why the dollar has been in such a steep decline. An investor can demand a higher dividend, pay a lower price for the company stock, or both. Right now Uncle Sam is paying a fixed "dividend" . . . so prospective investors have simply bid down the price of the "stock."