Indonesia currency is called Rupiah and always marked with Rp. with notes ranging from 1,000 to 100,000 and coins from 100 to 1,000.
You may want to bring small amount of notes, probably 400-700 dollars in large denominations before departing from your country. Change a relatively small amount of money at the airport on arrival - about $100 would be okay.
Otherwise, withdraw some from an ATM machine if you don't mind paying the foreign exchange transaction fee of 3 percent (depends on your bank policy).
If you need make changes safely in a hurry, you may do it in hotels, but the rates are usually unattractive. You will generally get a better rate of exchange at the legitimate moneychangers in main tourist areas (Kuta, Legian, Seminyak, Ubud, Sanur or Jimbaran).
If you are staying around Kuta, we recommend making transaction in PT Central Kuta Money Changers – they are legit and have several offices around the area.
On a note, the local currency changers only accept foreign notes in supremely pristine condition. Any tear, jottings, or the slightest blemish in the note may result in their refusal.
Basically, these moneychangers collect foreign exchange from tourists and sell it to Bank Indonesia, the country’s central bank, at wholesale rates. If Bank Indonesia rejects a note, they make a loss.
This is also why a $100 note will get a better rate than two $50 notes, because the smaller the denominations, the lower the rate they are willing to exchange back to Rupiah.
NEVER EVER change your notes in a small back-street shop or dodgy-looking moneychanger where they offer seemingly better rates. Be aware that when things seem too good to be true, the scammers are working to do their dirty tricks behind you. If you are walking in the street and strangers come up to you offering to change money, just politely walk away.
We’ve noticed so many reports about shady changers offering rates above the norm and the tourists ended up receiving less after getting distracted by two or three persons in a plot to draw their attention away from the cashier doing the money count tricks.
Pro Tip: Change your notes at midday to get the best rates. This is because at about midday, the spreads become narrow and you will get the best rates as Bank Indonesia is still open for trading.
Pro Tip: To check today’s Rupiah rate, simply search “USDIDR” (change 'USD' to your currency code if necessary) on Yahoo! Finance search bar.