Dollars and Euros are exchanged almost everywhere nowadays. The local currency is called nuevos soles. There are paper bills for 10, 20, 50, 100 and 200 soles, and coins for 10, 20, 50 cents as well as and 1, 2 and 5 soles. The rate is 1USD = S/.3,34.
In Peru money can be exchanged in the exchange offices or with the moneychangers in the streets. Usually the rate is better on the street than in the exchange offices and banks, but you take the risk of getting a false bill; when they give you money, check the bill and especially the coins for flaws.