Is exchanging US dollars into the local currency usually a practical option?

Question

This question is almost the flip side of Is it possible to get Mongolian currency in Sydney?

Is it usually practical (though perhaps not always optimal, related questions: Should I change most of my money in my home country or in the destination country? and When traveling to a country with a different currency, how should you take your money?) to transfer US dollars into the local currency either while entering, or after entering, the country? Assume you're flying by plane into a major airport for the country, rather than doing a land crossing into the middle (or edge) of nowhere.

I wondered whether some countries would oppose the US dollar for political reasons, but even North Korea and Iran allow you to either use or exchange US dollars. (Are there any countries which outright ban US dollars?)

I assume the main provisos are that you should have some local currency as soon as you're in the country to buy accommodation, food and transportation in most but not all countries, and that some methods of money exchange can have very long queues and only operate during business hours.

Answer 1

There are no countries that ban the US dollar, because this is a global trading currency. It is a currency that controls the effective rates of other currencies due to the large impact of the US economy on other global economies.

In addition, a large majority of international money movement takes places in so called "major currencies" such as the US dollar, the Euro, and the UK pound. Therefore, no matter how you start out with, when exchanging funds your money there is a high probably that is is being converted to USD and (the equivalent) is being transferred or exchanged.

You should always attempt to trade in the local currency, and try to have minimal local currency overhead when you exit the country (unless you plan on frequent visits to that destination). Converting local currency back can be more expensive than changing to the currency; however you can get some reprieve from this double-hit as some money changers offer a guaranteed buyback rate - but only within a couple of days of the initial transaction.

There are some strange local issues though. Some places do not accept the $100 bill because it is the one most often forged, others will only accept new bills and refuse old (used) notes.

In all cases, you are guaranteed the following:

1. Major hotel chains will gladly accept USD and return you the local currency at an extremely inflated rate.

2. Market traders usually offer the best rates; sometimes these are called "black market rates".

3. Banks and money changers can offer better rates, if you are changing a significant amount of money; usually over $15,000 but this amount varies.

4. At the airport, rates are expensive vs. the local market.

5. ATMs will be more expensive than changing money at a bank or a money changer; because there are normally extra costs involved with foreign cards, the ATM network and even the bank to which the ATM belongs. It is best to check with your bank as they may offer reduced fees with some partner networks.

6. The worst rate you will get is if you walk into a shop and want to pay with USD (assuming this is common practice in the first place). Not only will you be losing out on the rate, you will be returned local currency as change.