We will be heading to Lima and Cusco in July. I was just checking to make sure we will not have any trouble exchanging our US money in either location. Can I assume that ATMs are plentiful in Lima and Cusco? Should I wait to exchange money until I get to the Lima airport? Thank you.

We never had any trouble finding an ATM machine in Lima or Cusco. There are also ATMs at the Lima airport. We waited and used an ATM at the airport. The only minor issue we ran into is that the limit imposed by the ATM bank where you are withdrawing money was on a 24 hour basis. We got money at 5:30 pm and were unable to withdraw anymore until after 5:30 pm the following day. This was not really a problem, but its something that we never had happen in other countries. Usually it has been a daily, not 24 hour, basis. Enjoy Peru!

Yes, there are plenty of ATM machines but there were just a couple of obstacles. One, they only give out large bills. I always had to make change at the hotel. Second, some of the people in our group were not able to withdraw money. Their banks denied them the withdrawal. They than had to write checks to some of us that did have access to the ATM for travel funds. I would let your bank know you will be in Peru so you can withdraw money.

Citibank does not work at most ATMs in Peru. My friend and I had an awful time getting cash.

Is the rate of exchange significantly better thru an ATM vs. exchanging money at one's hotel?

Also, have been reading on Lonely Planet Thorn Tree forum and many posters make it seem as though you need to be an expert on scrutinizing the bills before accepting --- is fraudulent currency that rampant?

Lastly, seeking suggestion on amount of USD I should bring w/ me. Will be in Peru for 9 days, and hotels are already paid for, as well as a few city tours. Of course, do plan to use ATM and bring along a credit card.

Yes, the rate of exchange was more favorable at an ATM than in a Hotel. Even one of the hotels suggested that we not exchange money with them.

We had heard about counterfeit currency, but never encountered any and we did not scrutinize our money.

We rarely take much in dollars when we travel. For 15 days in Peru for 2 of us, we may have had $200 tops. We tended to get cash regularly from the ATMs and didn't use credit cards very much outside of paying for the hotels.
We always have ATM cards from 2 separate accounts as well as credit cards. Have fun!

We had a real disaster because our Citibank ATM cards did not work. One of our friends ended up being the bank for two of us until we got back to Lima (Citibank cards work at the Lima airport ATMs). I'd take a lot more than $200 in cash.

Yup - plenty of ATMs in Lima and Cusco. I had a bit of a problem with my ATM card when I arrived - I was using my brokerage account since it didn't charge any fees. (Bank of America charges $2.50 plus a $5.00 foreign ATM fee - $7.50 every time you use a BofA ATM card!). For some reason, my pin wasn't working, and I tried it 3 times, which automatically locks out your card. I had to call my brokerage to get the card reactivated.

You shouldn't need much cash if your lodgings, tours, and major transportation are paid for. You'll only need money for meals, local transport (taxis), and souvenirs - all of which can be paid in local currency.

I'd carry $100-200 USD in cash, and a bit of emergency money in traveler's checks. And, yes, counterfeiting is widespread. When I was there, people weren't taking $100 USD bills with certain serial numbers because there were so many counterfeits; and people would closely scrutinize any paper money I gave them.

Btw, if somebody offers to charge your credit card in US dollars instead of Soles, I would decline. They usually give you a poor exchange rate. Have your bills charged in local currency.