Exotic currency is currency that is not well established and used in the world.  Exotic currency is called that because it is unusual in the trading market, it is difficult to exchange due to its low demand which is due to its higher than average volatility and risk.  Examples of exotics currency are the Iraqi Dinari, Ethiopian Birr, Korean Won, Turkish Lira, Brazilian Cruzeiro and others.  These are expensive to trade due to their illiquidty, which ups their bid-ask spread, and risky because these countries’ economic future is usually very uncertain.