The local currency in Peru is the Nuevo Sol S/. ( Sol means sun).

You can exchange USA $ or Euros at almost any place, banks, money changing offices, hotels, restaurants and with street money changers. Beware of false notes. You are better off  exchanging at  hotels or  banks.

Many ATMs are available for all systems (Visa,Master Card,Cirrus, etc), but you need to plan to take cash if you go to  Aguas Calientes.  ATMs and banks are a rare find in those areas. Most ATM machines in Peru do not add any charge for withdrawing money from your home bank account, but your own bank might. As of April 2008, the only banks that add a surcharge for withdrawal were Interbank Globalnet ATMs, and Banco Continental (each adds a surcharge of about USA$2 per withdrawal).  In the Lima airport, the only ATMs are Interbank Globalnet, so there's no way to avoid a surcharge at the airport. You can withdraw money in Peruvian Soles or USA Dollars at most machines across the country.

You can redeem travellers checks at most banks, but you will get lower exchange rates and charged a comission. Do not  use travellers checks in Peru, as many places do not accept them. Only the owner of the traveller check can cash it at a bank, no endorsments are allowed.

The USA $ dollar is accepted at almost all comercial places, and many times, prices are quoted both in USA $ and S/. You can pay with dollars and receive dollars  or soles in exchange. Bring new crispy low denomination bills as they are well accepted by money changers. Old, torn or high denomination bills are not easily accepted. Like in the USA, any transaction in cash for USA $ 10,000 or more has to be reported to the local authorities.

The actual exchange rate in  August 2009, is fluctuating between 2.90 and 3.00 soles to one USA $.

Most U.S.banks will change USA $ to soles with a few days notice and a minimal fee, thereby not having to deal with exchanging in Peru, but will give you a much lower exchange rate.