The currency of Peru is the nuevo sol. As of 25 October 2011, US$1 is worth S/.2.71 and 1⬠is S/.3.63 S/. is the symbol for "nuevo sol". Coins are available in five, two and one sol, and in 50, 20, 10, 5 and 1 centimo. 5 and 1 centimo coins are not normally accepted outside of big supermarkets or banks, so avoid them or bring them home for a collection or to give to friends. Notes are available at 10, 20, 50, 100 and 200 soles denominations; 200 soles notes are uncommon and will not be accepted in the same places that will not accept a US$100 note or a 50 pound note.
Counterfeiting is common: take time to get familiar with the money and do not hesitate to reject any note or coin especially the 5 sol coins that look suspicious, just like any Peruvian would do. In other words, if you want to look like a savvy foreigner, take 10 seconds anytime you receive a paper note to look it over. All bills have a watermark and security stripe, and the large number on the extreme right denoting the denomination of the bill will change from purple to green when viewed at an angle. Don't take any note that is ripped; you won't be able to use it anywhere else but a bank.
If you are stuck with a counterfeit coin or note, if you try to use it at big stores they may want to confiscate it. Don't accept damaged/ripped bills, since you will have to take them to a bank in order to change them into new ones before you can spend them. Be especially careful when exchanging money with money-changers on the street a common way for counterfeit money to enter the money supply or at the border notably the one with Ecuador.
Typically, small bills are very helpful to carry around. Change large bills into small ones as often as possible. If you only have 50 and 100 Soles notes on you, consider changing them at a bank. Local merchants and taxistas often claim to not have any change on them, forcing you to wait in public while they search for some potentially dangerous and sometimes with the hope that you'll grow impatient and let them keep the change.
Travelers checks or credit cards are usual. Although cash has a ca. 2% better change rate, you are strongly advised not to carry large amounts of cash on your journey. The Banco de Credito BCP gives good rates on traveler checks. Rates in change offices are often somewhat worse. It's always worth comparing them before changing your money. When changing your money in change offices, check their calculations. Most of them make calculations on the fly for the amount you want using an electronic calculator in plain view, even showing you the process step by step unless they are brutally obvious, like changing tens or hundreds. If they don't show, keep the money in your pocket and find someone that does. Even in the bank, check your bills for authenticity.
ATMs are available in big cities, upmarket hotels, and touristic areas. With a Cirrus or Maestro sign on it, you can withdraw cash easily. Make sure nobody is trying to see your PIN code. The exchange rate is the same as credit cards but fees are much lower. Most banks do not charge a fee for getting cash from their ATM's, however some do. Stay away from BBVA Banco Continental - their ATM's charge very high fees and don't tell you until it's too late the fee is printed on the receipt, but not on the screen or next to the ATM as it is in other countries.
In smaller towns, it can happen that there are nobody who will accept your credit card or traveler checks. For this case, you should have taken care that you have enough cash with you. Nice new Dollar bills not too high,10 or 20 US$ bills are fine can help, too, since they are easier to change than travelers checks. In Peru, it's not as common for US$ to be accepted in transactions as in other countries such as Ecuador. Often in small towns, local shops will change money for you. If so, it will be clearly marked. Take only US$ bills in good condition since bills slightly torn or even old-looking will not be accepted.
bargaining
Bargaining is very common. If you are not used to it, respect some rules. If you intend to buy something, first ask the price, even if you already know what it actually should cost. Then check whether everything is all right. Does the pullover fit you? Do you really want to buy it? Is the expiration date on the cheese exceeded? etc. If the price is OK, pay it. If not, it's your turn to say a lower price, but stay realistic. First get an idea about how much you would expect to pay. Then say a price about 20-30% lower. It's always good if you can give some reason for that. Once you have said a price, you cannot give a lower one later. This would be regarded as a very impolite behavior. If you feel that you can't get your price, just say "No, gracias." and begin to walk away. This is your last chance. If you are lucky, the seller will give you a last offer, if not, say "No, gracias." again and go on walking. Realize that most of the products in touristy markets i.e. the market in Pisac will be sold in nearly every other market throughout your travels in Peru and South America, so try not to worry about never again finding that particular alpaca scarf.
You have a way for bargaining without saying an exact price, and it's saying "¿Nada menos?", then you will be asking just if they can lower a bit the price.
Keep in mind: Never begin to bargain if you don't really want to buy.
handicrafts
Peru is famous for a lot of different, really nice and relatively cheap handicrafts. Keep in mind that buying handicrafts support traditional skills and helps many families to gain their modest income. Look for:
Pullovers, and a lot of other alpaca-woolen products in all the Sierra. Puno is maybe the cheapest place.
Wall carpets tejidos.
Carvings on stone, wood and dried pumpkins.
Silver and gold jewellery.
typical music instruments like pan flutes zampoñas, skin drums.
many other
Do not accept any handicrafts that look like or actually are precolumbian pottery or jewelry. It is illegal to trade them and there is the possibility not only of them being confiscated, but of being prosecuted for illegal trading, even if the actual artifacts are copies or fakes. Dealing with the police from the criminal side is messy and really unpleasant.
Buyer beware: Watch out for fake BambaAlpaca wool products many items sold to the unsuspecting gringo are actually synthetic or ordinary wool! That nice soft jumper in the market for US$8 or so is most certain to be acrylic. Even in places such as Puno there is no easy way to tell if it is made from Alpaca, sometimes it might have a small percentage of Alpaca mixed in with other fibres. Baby Alpaca is not from baby animals but the first shearing and the fibre is very soft and fine. Generally Alpaca fibre has a low lustre and a slightly greasy hand to it and is slow to recover from being stretched. Shop and compare; real Alpaca is expensive.
costs
As a low budget traveller, you can live on US$50 per day withoutproblems. Basic hotels or hostels hospedajes can be easily foundin all Peru. The cost per night is about US$8-15 for a shared room in a youth hostel.
There are a lot of very cheap restaurants US$0.50-1.50, but maybe this is not the best place to save your money. In somewhat better restaurants you can get lunch and dinner menus for US$2 -3. Of course, in every city you can find restaurants where you can spend US$20 and more if you want.
Buses are not very expensive. The usual price for a 10 h bus ride in a normal bus not "Royal Class" or something like that is about US$6. However, you'd do well in paying the extra buck, the difference between a US$6 ticket and a US$12 is enormous. Again, avoid bus companies that allow travellers to get into the bus outside the official stations. They are normally badly managed and can be dangerous, due both to unsafe practices or to highway robberies, which are unfortunately not uncommon. This should be heeded especially by female travellers going on their own. Get information at the hotel, hostal or tourist information booth before catching a ride.
Trains except the ones for Machu Picchu, which are relatively expensive run for similar fees.
Don't forget to retain your exit fee of US$30.25 They do accept USD or Soles for the fee and be sure to pay the exit fee before you get in line for security checks or you'll get to wait again.
general notes
Supermarkets can only be found in cities and are somewhat expensive. In every town, there is at least one market place or hall, except Lima that has a dense concentration of supermarkets, malls and department stores. In cities, there are different markets or sections of one big market for different articles.
Stores with similar articles tend to be grouped in the same street. So, if you once know the appropriate street when looking for something special, it shouldn't be no more problem to find it quite soon.
Giving tips in restaurants at least when basic or middle-range is not very common but 10% for good service is polite. In the cities, you will always find some beggars, either sitting on the streets, or doing a musical number on the buses. Many of them really need help, especially the elderly and handicapped. Usual givings are about 0.10 - 0.20 Soles US$0.03-0.06. This is not much, but some unskilled workers don't get much more than 10 Soles for a hard working day. Whether you want to give money to child beggars or not is your decision. But consider that doing so may make it more attractive for parents to send their children begging in the street instead of sending them to school. Buy them food instead, they do need it.