The Bank of New also undertook research on the Target Zone: Align, Realign and Continuously Realignment and Manageability and to advocate the global central banks to maintain and manage their target zones for their credibility.
The analysis on the NZD which is one of the prime currency under carry trading according to BIS report is indicating that the carry trading activity is useful to slower the weakening of NZD in the market and to slower the pressure on NZD by the USD. Further, the carrying on NZD by the CHF, JPY as well as EUR not to drive the NZDUSD to break the current upper band/ceiling of the NZDUSD . The unwinding trading also not to pressure the NZDUSD to break her lower band/ceiling as the target zone is managed by the FED and SNB.
It could be concluded and based on current FX price fluctuation in the market, the carry trading and unwinding trading less likely to cause currency crushes by the management of the target zone, and further become supportive to slower the weakening of the currencies by allowing the central banks not too undertook central banking market sterilization (honeymoon affect).
The current policies, regulations and practices by a coordinated efforts of the global central banks likely fit as expected to maintain and manage the global equilibrium as provoked by the Bank of St . Louis' presentation reports in Tokyo and Paris. IMF's Christine in recent seminar i Washington DC also stressed that the current international monetary system is solid and aware the minor provocation to return to gold standard.