money issues

Here's a few tips I've gleaned from other travellers' websites:

When you arrive in Perú, it is best to do so with U.S. dollars. While most western currency can be exchanged for Peruvian Soles rather easily, any shop, restaurant, or business will take U.S. dollars as payment. This cannot be said readily of all other western currency. Be prepared however to receive your change in Soles. It is a good idea not to use bills in excess of $10-$20 U.S., as you might find it difficult for the merchant to change anything larger. There are money changing booths almost everywhere in every major Peruvian city in the Plaza de Armas and their hours and rates are usually better than the local banks. (Source: Orquidea Tours)

It's wise to exchange American dollars in the smallest notes you can get and horde as many small notes and coins as possible throughout your holiday travel in Peru. Change is often scarce and it's cheaper to provide small notes to the many people who expect a tip in Peru. Make sure the American dollars you carry with you don't have rips or other damage, and hide/guard your money closely. (Source: Peru Holiday Advice)

When you travel you need to look at every bill and coin that you exchange. Whether it be on the street, in banks, change from your meal at a restaurant, or buying souvenirs, you must examine the money. Not only is there counterfeit in circulation, but many countries will not accept bills that are torn or excessively wrinkled.

To protect yourself from bad exchanges, you need to know what a good bill looks like. These days bills all over the world have a thin strip hidden inside them, often with the bill's denomination. Also a watermark is included of the person's face that is on the bill. The strip and watermark can be seen by holding the bill up to the light. For example, in Peru a good bill of one hundred soles has a strip that says "Peru 100" and a watermark of the face of Jorge Grohmann, which also appears on the face of the bill. The surface of the bill is a little rough. Other bills have a different watermark, such as "Peru 50" or "Peru 20", depending on the bill's value.

Once you know how to spot bad money, you can make exchanges. Look at every bill and coin handed to you, and if you don't like what you see, ask the person to exchange it. This is a common practice. (Source: Protect your money: Tips for travelling in Peru)