The best way to exchange US dollars in Nicaragua is not in the banks for sure. Sometimes your hotel might give you a good rate but for the most part you will always get the best rate in a city market. In Managua, Mercado Orientale is a great place. You will see men standing with big wads of money and a calculator. You just ask what rate they are giving and they calculate the money right there for you.

Prior to leaving the states go to the bank and ask for all clean bills. If your bills have any rips or tears or are damaged, they will not be accepted anywhere in Nicaragua. This can become a real pain in the neck!