The local currency is the Real, although most major credit cards are widely accepted, and can be used to withdraw money from most cash points throughout the city.
US Dollars are the best foreign currency to carry for exchange, and there are Cambio offices in almost every town in the country.
It seems that every person in Brazil expects a tip, from waiters (10%), which they helpfully include in the bill; to taxi drivers (round up to the nearest note). If you are driving, you should keep a stock of small value notes in order to pay parking assistants who leap heroically from the pavement in order to guide you into parking spaces. It may seem as though them asking for cash for just waving their hands around a bit is over the top, but bear in mind that a few pence in Brazil makes a difference to someone living in a cardboard box in the slums, and that also if you don't pay, you may well return to a damaged vehicle.