Tourist trips are fully prepaid, so you could in theory manage in Bhutan without any local money at all, though you'll probably want to change at least US$50 to US$100 to pay for laundry and drinks, plus whatever you need for souvenirs and tips.

The exchange counters at the airport, larger hotels and the banks in Thimphu and Phuentsholing can change major currencies, and some smaller currencies from Asia and Scandinavia. Indian rupees are used interchangeably with ngultrums and are not officially exchanged at banks.

If you are heading to central and eastern Bhutan, you will do better sticking to US dollars. The exchange rate for US-dollar bills in denominations less than US$100 is around 10% lower than for large bills. US-dollar bills that are pre-1993 are generally not accepted.

You may change your unused ngultrums back into US dollars on departure at Paro airport (including in the airport bookshop). Travellers departing overland didn't have this facility at the time of research. You may need to produce your original exchange receipts. Ngultrums are useless outside of Bhutan (except as a curiosity).

Bhutan has two major banks, the Bank of Bhutan (www.bob.bt) and the Bhutan National Bank (www.bnb.bt), each with branches throughout the country. Smaller banks with forex include T-Bank and Druk PNB, with branches in larger cities. In addition, you can change money at many hotels and some shops.