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The Bhutanese currency is the ngultrum, which is pegged to the Indian rupee and thus trades at par with that currency. There are no coins, and you can expect to be handed wads of cash. The smallest note is for 1-ngultrum, and it's worth only about $0.02 USD. As of April 2013, USD1 is equivalent to about 53 ngultrum if you are using USD50 or USD100 notes. Please take note that USD50 and USD100 notes are given a better exchange rate than USD20 notes or lesser. The smaller USD notes fetch about 5% less.
If you plan to bring $100 U.S. notes be aware that the banks in Bhutan do not accept notes printed in 1996 do to counterfeiting that took place in that year. So go through your notes carefully--also, no tears, ink marks, staple holes etc.
Bhutan is a cash economy! Visa and Mastercard are not accepted at smaller shops, but bigger shops and some hotels accept Mastercard. There is an American Express office in the capital, and Amex is accepted in a few rare instances. More important, an Amex office means you can get your travelers' checks replaced if necessary.
If you bring in cash, Your best option is to change dollars or whatever you bring into ngultrums at the airport. The exchange rate is the same as in the banks in town. Keep in mind that banks get much harder to find outside the capital. You can also change your money at the hotels in Thimphu, but the rate is not as good.
For a stay of two weeks 100-150$ will cover your expenses, inclusive drinks with meals, and some souvenirs. However, this will certainly not be enough to cover tips.
In most of the world, currency exchange is a fairly straightforward process. In Thimphu, it involves several lines and just waiting around until you're called. Do not be surprised if you invest more than 30 minutes just exchanging money. It's best to avoid doing this more than once, so get what you need the first time. Another way of avoiding long waiting times is to ask your guide to assist in changing money. Since you are arranging your tour with a local tour company ask them to bring an envelope to the airport with $100 U.S. in ngultrum and exchange that for a crisp $100 note and you're all set. Locals do not have to give their passport details, etc and thus save time.
If you go, you'll mainly need money for some beautiful handcrafted souvenirs. The philatelic bureau also sells some nifty stamps in Thimphu. Everything else is included in the price of the tour, from meals to hotels to gasoline, so it's best not to get too much money at the bank. You may find yourself with souvenir cash later.
Because Indian money trades at par with the ngultrum, rupees are generally accepted in Bhutan and may be occasionally given as change. But since 2012 there have been shortages of Rupee notes due to Bhutans high import economy so if you can, bring and spend Rupees--you will be doing your guide and driver a big favor.