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“We are far from finished,” Arindam Sandilya, co-head of global FX strategy, stated on Bloomberg TV. “The carry trade unwind, at least among speculative investors, is around 50%-60% complete.”The carry trade has faced significant challenges this past week, driven by a surge in yen volatility due to concerns over a potential US recession and the Bank of Japan's recent rate hike.Yen carry trades, which involve borrowing in Japan at low rates to invest in higher-yielding assets elsewhere, have been popular when volatility was low and Japanese interest rates were expected to stay near zero. However, an 11% appreciation of the yen against the dollar in the past month has made many of these trades unprofitable.The rush to close short yen positions has affected both emerging and developed markets that were previously favored by investors using this strategy for higher returns. The Mexican peso, significantly impacted by the trade unwinding, fell further on Tuesday, with losses of 6.8% over the past month, the largest drop among major currencies tracked by Bloomberg.Sandilya suggested that a return to pre-yen rally levels for carry trades is unlikely in the near future due to the technical damage inflicted on portfolios by the recent sharp movements.“A favorable scenario would be stabilization around current levels, with perhaps a modest recovery at best,” he noted. “In many cases, you might see continued movement, albeit at a slower pace than before.”