I have contacted the merchant. They have yet to respond. I wonder what else can I do if the merchant stubbornly refuse to do anything.
That is the correct thing to do. You should try to resolve problems like this with the merchant first.
What protection do credit card consumers have when this happens to them? Do we have to suck it up?
No, you don't have to suck it up. The charge was unauthorized and regardless of what the merchant says, you are not required to pay it. Your next step would be to report the unauthorized charge to your credit card company and your unsatisfactory attempt to get the merchant to fully compensate you for the losses that they caused you. They are required to do so.
If someone makes a mistake that causes you to suffer a loss, they are responsible for the full amount of loss they caused. The mistake is their fault, as they conceded, so the exchange losses you suffered as a result of it are also their fault because they flowed directly from it.
Yes, it's bad luck, but that's life. You can throw a rock 100 times and not break a window and you don't owe any money. But if you throw it once and it happens to break a window, you're paying for the window. Sometimes small mistakes have big consequences. Don't like to pay for them? Be more careful.
Update: Let me rebut a comment to this answer as others probably feel the same way:
The merchant has nothing to do with the currency exchange.
False. The merchant initiated the currency exchange by posting the transaction. Merchants know that sometimes they cause currency exchanges and, in this case, they did. The currency exchange was the direct, predictable, and automatic consequence of the merchant's actions. If you make a mistake, you are fully responsible for its direct, foreseeable consequences, whether or not you intended them or were specifically aware they would happen.
All the merchant knows is a charge for $10 was made in error and reversed.
Again, false. He contacted the merchant and told them what happened.
The rest is on the bank and/or card network if at all.
False. The merchant is responsible for any harm that directly flows from their mistake. This is a basic principle of law. If you throw a baseball and it happens to hit a window, you're responsible for the broken window. This is true even if you can often throw a baseball and not break a window or if you didn't immediately know you hit someone's window. The merchant made a mistake, they're responsible for the harm they caused.
Nevermind the obvious jurisdiction issues of actually holding a foreign merchant accountable if the bank/card network won't eat the currency exchange loss.
Fortunately, you don't have to. In pretty much every country, there are already laws that say that bank/card networks can't attempt to enforce an unauthorized charge. The original charge was unauthorized, so it can't make him responsible for any payment.
Your answer almost completely ignores the actual issue of this question.
No, it ignores the attempt to obfuscate the simple facts that the merchant is responsible for the harm they caused and that the bank/card network has no legal authority to enforce a charge that is indisputably unauthorized.