Several years ago, I joined a ship in Valparaiso, Chile, and sailed to Buenos Aires, Argentina. In preparation for the journey, I visited my currency supplier and requested Chilean Pesos, Argentinean Pesos, and Uruguay Pesos, as well as Falkland Island Pounds. I was told that one of the currencies was available, but only in larger denominations. Another one could be ordered, but it was not certain when it would arrive. The other currencies were not available, and I should "visit the currency exchange at the airports" (which is kind of hard to do when you are on board a ship). I arrived in Santiago, Chile, a week before departure, so I was able to obtain the necessary Chilean Pesos.
What I discovered on this sailing:
When I tried to spend my Chilean Pesos, I was asked "Do you have US Dollars? I prefer Dollars." When I handed them a $20 bill, I was asked, "Don't you have something smaller?"
When using local currency, you need to convert just what you will use, because the next country you will visit doesn't accept the previous country's currency.
FACTS--
There are a lot of cruise ships sailing in South American waters.
Most of the ships use US Dollars as the on board currency.
You can convert traveler's checks to US Dollars at the ship's Purser's Office.
There is a limited supply of small US Dollar bills at the Purser's.
Most of the ships do not deal in local currency.
The EXPERIMENT--
Before this trip (encompassing many more South American countries), I went to my local bank and loaded up on a few $10 bills, more than a few $1 bills, and LOTS of $5 bills (all US currency). There are safes in each cabin, so I only took what I wanted to spend at port that day. My goal was to see if, indeed, one could travel from Boston to Buenos Aires and not have to worry about exchanging currencies, but use US Dollars the entire time.
MY FINDINGS --
The US Dollars were gladly accepted the entire trip.
Only ONCE were the dollars not accepted. On our last day in Buenos Aires, a very young taxi driver wasn't sure about the currency and told me he preferred Argentinian Pesos. Since he had delivered us to our hotel, I just went to the desk and exchanged the $9 I needed, and gave him his payment. (He was prepared to take a credit card for payment, by the way.)
97% of the time, I was given change in US Dollars.
Next time I do this, I MUST take a lot more $1 bills. They really come in handy.
I used a credit card for a large purchase in Lima, Peru. (My favorite camera died in Trujillo.) Other than that, I used my small bills.