How can one be absolved of a sin after keeping a portion of an amount that was supposed to have been transferred? And should the remaining amount be returned in local currency or in the original currency, taking into consideration the significant exchange rate difference?

You erred by not returning the money to your friend, and your betrayal is considered great because you lied to him after he entrusted and believed you. Therefore, you must repent to Allah and return the remaining amount to its owner in the local currency that was in circulation at the time of the exchange, as your responsibility is not absolved except by doing so.