A decrease in the foreign real interest rate would cause the domestic country's net exports to fall and cause the domestic country's is curve to shift down.
Real interest rates are interest rates that have been adjusted to reflect inflation. Once updated, it now accurately depicts the borrower's true borrowing costs as well as the lender's or investment's actual yield. Real interest rates depict the rate at which current items are gradually preferred over future ones.
The real interest rate is the interest rate that an investor, saver, or lender will actually get after accounting for inflation. A more formal explanation is given by the Fisher equation, which states that the real interest rate is roughly equal to the nominal interest rate less the inflation rate.
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