A lightly traded and very illiquid currency is known as an exotic currency.
The term “exotic” has nothing to do with the country or countries in which the currency is used, nor does it refer to its size or location.
Trading in an exotic currency is frequently inefficient and costly due to the lack of liquidity, which leads to greater exchange rate spreads.
Exotic currencies can be both convertible and non-convertible, such as the Mexican peso and the Brazilian real.
The Mexican peso (MXN), Chinese yuan (CNY), Russian rouble (RUB), Hong Kong dollar (HKD), Singapore dollar (SGD), Turkish lira (TRY), South Korean won (KRW), South African rand (ZAR), Brazilian real (BRL), and Indian rupee are some of the most regularly traded exotic currencies (INR).
