Join the newsletter that everyone in finance secretly reads. 1M+ subscribers, 100% free.

The Indian rupee is in for a bumpy week, with the US set to slap a new 25% tariff on Indian goods from August 27, just as the Federal Reserve signals it might cut rates as early as September.

What does this mean?

Tensions are rising between India and the US, as Washington hikes total tariffs on Indian exports to 50% -- in part as pushback over India's discounted Russian oil deals. Meanwhile, hopes for a weaker dollar are brewing after Fed Chair Powell pointed to softer jobs numbers and slower inflation at Jackson Hole, hinting that lower US rates could be on the cards if upcoming data stays cool. But many traders think the rupee's fate could soon rest more on trade tensions than on monetary policy. Last week, the rupee barely budged, closing at 87.53 per US dollar, while India's 10-year bond yield shot up to 6.55% -- the sharpest weekly jump in over three years -- thanks to fiscal worries and looming economic reforms.

India's 10-year bond yield soared last week as investors sized up government plans for a major GST overhaul. The GST Council is targeting a simpler two-rate system by October, phasing out the 12% and 28% brackets in favor of just 5% and 18%. With nerves around possible fiscal slippage, bond markets are on edge, and the rupee could remain volatile as traders weigh upcoming data from both the US and India.

The bigger picture: Trade tensions and reforms ripple globally.

US trade moves are setting off waves across emerging markets, with new tariffs on Indian goods underscoring just how closely intertwined global economies have become. For India, it's not only about tweaking tax structures -- the government's efforts to tighten up fiscal policy and steady the rupee come as global investors are bracing for more surprises, from central banks and trade partners alike.