International Payments: the strategic role of exotic currencies

In an increasingly interconnected economy, the efficient management of international payments is a key factor for companies operating on a global scale. The growing adoption of digital and cross-border payments is transforming the financial landscape, making payment transactions faster, safer and more accessible. International trade and the growth of emerging economies are increasing the need to carry out transactions in exotic currencies, those that are less commonly traded on global currency markets.

For companies, this presents a dual challenge: on one hand, seizing new opportunities in high-potential markets that can give a significant boost to exports; on the other, effectively managing the complexities related to exchange rates, volatility and local regulations.

In this context, cross-border payment solutions are becoming increasingly central, optimising financial operations and ensuring greater efficiency and competitiveness.

THE GLOBAL TREND IN CURRENCY PAYMENTS
 

The international payments sector is undergoing a significant transformation, driven by digital innovation, the rise of e-commerce, and growing demand for faster, safer and more efficient payment experiences. According to Capgemini's World Payments Report 2025, digital payments reached 1,411 billion in 2023 and are expected to rise to 2,838 billion by 2028.

The growth trend varies significantly across regions, with emerging economies leading the sector’s expansion:

•  The Asia-Pacific (APAC) region will see the fastest growth in digital payments, with a projected annual increase of 20.4%, driven mainly by China, India and Southeast Asian markets.
• Latin America (LATAM) is experiencing strong expansion in digital payments, with a 23.2% increase expected in 2024, led by Brazil and Mexico.
• The Middle East and Africa (MEA) are forecast to exceed 15% annual growth, with economies such as the United Arab Emirates, Saudi Arabia and Nigeria accelerating the development of digital financial infrastructure.

The expansion of supply chains and the creation of new links to different emerging countries are significant factors that are prompting companies to engage in trade with suppliers using so-called exotic or local currencies to benefit from competitive and economic advantages.

WHAT IS AN EXOTIC CURRENCY?

An exotic currency is a currency that is not among the most commonly traded on international markets. For this reason, trading it can be more complex than dealing with more liquid and widespread currencies. Exotic currencies often belong to emerging economies and are characterised by low trading frequency and high volatility.

With the increase in digital transactions in emerging markets, the need to manage payments in exotic currencies is also growing. Developing economies are expanding their access to global markets, and the use of local currencies in cross-border transactions is becoming increasingly relevant for internationally operating companies.

The ability to make payments in exotic currencies enables companies to improve liquidity management and strengthen relationships with local business partners. In this scenario, currency payment optimisation represents a crucial competitive advantage for globally operating companies.

However, access to buying and selling these currencies may be limited, and their low liquidity tends to increase volatility, significantly affecting exchange rate fluctuations.
Some commonly traded exotic currencies include: South Korean Won (KRW), Brazilian Real (BRL), Indian Rupee (INR), Egyptian Pound (EGP), Chilean Peso (CLP), Vietnamese Dong (VND), Taiwanese Dollar (TWD), Nigerian Naira (NGN).

THE ADVANTAGES OF INTERNATIONAL PAYMENTS IN EXOTIC CURRENCIES
 

For companies wishing to expand their presence in international markets, working with partners and suppliers in often faraway, developing countries is an increasingly common necessity to grow or scale their business. However, entry barriers to these markets, mainly due to payment execution complexities, have long limited access to important business opportunities.

The ability to make payments directly in the local currency represents a strategic advantage that can facilitate access to new products, customers and suppliers that were previously difficult to reach. Moreover, in a context where supply chain flexibility is becoming increasingly crucial, especially for small and medium-sized enterprises, diversifying commercial partners in Africa, Asia, and Latin America allows for reduced dependency on traditional markets, often dominated by large competitors.

MAIN BENEFITS OF PAYING IN EXOTIC CURRENCIES
 

• Improving relationships with trade partners
  Making payments in the local currency helps strengthen relationships with foreign suppliers, demonstrating a greater understanding of their financial needs. In many international contexts, this approach can even be a decisive factor in winning contracts, offering a competitive edge over those who operate exclusively with major currencies.
• Securing discounts on purchases
  Suppliers who receive payments in a currency other than their own often include a premium in the price of goods to protect themselves against exchange rate fluctuations. This surcharge can increase the overall cost of a transaction by several percentage points. Paying directly in the local currency, on the other hand, can eliminate these additional costs and enable more favourable purchasing conditions.
• Negotiating longer payment terms
  When foreign suppliers are paid in strong currencies such as the dollar or the euro, they often demand shorter payment terms to mitigate the risks associated with currency fluctuations. Conversely, by paying in their local currency, the exchange rate risk is borne by the buyer, making suppliers more willing to offer extended payment terms and better conditions.

Moreover, companies able to send funds to their foreign subsidiaries directly in the local currency can better control and limit conversion costs while reducing the risks associated with exchange rate volatility.

As a result, paying in the local currency allows companies to lower overall costs, ensure greater price stability, and improve the quality of supplies, establishing stronger, trust-based trade relations with local counterparts. Additionally, this strategy can represent a significant competitive advantage, particularly over competitors that transact only in dollars, euros or other major currencies.

CHALLENGES ASSOCIATED WITH PAYMENTS IN EXOTIC CURRENCIES
 

For internationally active companies, the need to pay suppliers in the local currency is steadily increasing. This choice allows for improved liquidity management and lower overall financial operation costs. In fact, making payments directly in the business partner’s currency may prove more advantageous than using strong currencies such as the euro or the dollar.
However, several aspects of exotic currency payments should not be overlooked.

• Exchange costs and volatility
  Currency conversion in international payments can be problematic when there are significant fluctuations between the local currency and a strong currency. This can impact company margins, particularly in import-export operations with emerging economies. It is, therefore, important to adopt versatile and secure solutions that enable international payments in local currencies with automatic exchange rate conversion, thereby ensuring cost transparency and control.
• Local regulations
  International payment regulations vary significantly from country to country and can complicate the transfer of funds in exotic currencies. Some states use banking formats that differ from the BIC and IBAN standards, requiring additional information to complete transactions. These specificities can lead to delays or payment rejections, directly impacting supply chain management. The G20 roadmap has outlined global objectives and actions to be implemented by 2027 to address issues such as high transaction costs, low payment speeds, limited access to payment services, and a lack of transparency.
• Instability in emerging markets
  The financial markets of many emerging economies are marked by political instability and regulations that change frequently. These factors can affect the stability of payment operations, increasing the risk of blocks or interruptions in money transfers. Corruption and lack of transparency in some countries can also compromise the reliability of the local banking system, resulting in difficulties managing financial flows.

By conducting international transactions in a local currency, the financing and accounting process becomes more secure and accurate while reducing the potential for corruption and fraud within the country.

To ensure smooth financial operations, companies must therefore evaluate not only cost efficiency and competitive pricing but also the reliability and speed of payment services.
For this reason, it is essential to rely on a reference bank that can provide access to cross-border payment services in a wide range of currencies while also complying with regulations on international currency transfers.

CROSS-BORDER PAYMENTS AND EXOTIC CURRENCIES: A GROWING OFFERING

Thanks to partnerships with leading market providers in cross-currency payment management, Intesa Sanpaolo has expanded the range of currencies available for international transactions, now covering approximately 140 currencies out of more than 180 global ones. This expansion allows for payments in over 99% of the currencies traded on the FX (Foreign Exchange) markets, providing businesses with greater flexibility in cross-border operations.

Through Inbiz, companies can make transfers simply and directly, with automatic conversion into the destination currency and guided input of any additional information required by the respective destination countries.

The expanded service, available for payments debited from Intesa Sanpaolo Italy current accounts, offers an enhanced payment experience, ensuring transactions are transparent (with both the euro debit amount and the local currency amount shown), secure, and compliant with the highest international standards.

This initiative reaffirms the commitment to offering increasingly advanced solutions in line with the needs of companies operating in a constantly evolving global economic context.

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