Italian city, intimate and more exotic (7)
I believe the answer is:
palermo
'italian city' is the definition.
(city in Italy)
'intimate and more exotic' is the wordplay.
'intimate' becomes 'pal' (I've seen this in another clue).
'and' is a charade indicator (letters next to each other).
'exotic' indicates anagramming the letters (an unusual form of the letters).
'more' is an anagram of 'ermo'.
'pal'+'ermo'='PALERMO'
(Other definitions for palermo that I've seen before include "Chief port of Sicily" , "Sicilian capital" , "Capital city of Sicily" , "Main city of Sicily" , "Italian city" .)