What is the Currency of Peru?

What is the currency of Peru?

If you're planning a trip to South America, trading internationally, or simply expanding your knowledge of global currencies, understanding the currency of Peru is essential. This article is for travellers, import/export businesses, international investors, and anyone dealing with cross-border finance. We’ll explore what Peru’s currency is, how it works, who uses it, and offer practical tips for managing it abroad or online.

What is the Peruvian Sol?

The official currency of Peru is the Peruvian Sol, abbreviated as PEN and symbolised as S/. It replaced the previous currency, the Inti, in the early 1990s as part of major economic reforms aimed at tackling hyperinflation. The name sol is derived from the Latin word solidus and is also a Spanish word meaning “sun,” reflecting the country’s cultural and historical identity.

One sol is subdivided into 100 céntimos. The most common denominations include coins of 10, 20, and 50 céntimos, as well as 1, 2, and 5 soles. Banknotes are typically issued in denominations of 10, 20, 50, 100, and 200 soles.

Who uses the Peruvian Sol?

The Peruvian Sol is used throughout the Republic of Peru, including all major cities such as Lima, Cusco, Arequipa, and Trujillo, as well as rural and remote areas. It is the legal tender for all goods, services, and financial transactions within the country.

Tourists must use soles when paying for accommodation, food, public transport, and retail. While some businesses in tourist-heavy areas may accept US dollars, this is not guaranteed, and change is almost always given in soles.

How does the currency work in practice?

The Central Reserve Bank of Peru (Banco Central de Reserva del Perú) is responsible for issuing currency and managing monetary policy. The sol is a free-floating currency, meaning its exchange rate is determined by market forces rather than a fixed peg.

That said, the Central Bank has a policy of managed float, occasionally intervening in currency markets to stabilise excessive volatility. In recent years, the exchange rate has typically fluctuated between 3.5 and 4.0 PEN to 1 US Dollar, though this can vary depending on economic conditions.

Inflation in Peru has remained relatively low and stable over the past decade, making the sol a trusted and credible currency in South America.

Benefits and risks of using the sol

Benefits:

• Stable inflation and strong monetary controls help preserve the value of the currency.

• Easy access to cash via ATMs, especially in urban areas.

• Widely accepted for all domestic transactions without any requirement to carry foreign currency.

Risks:

• Exchange rate volatility due to its floating nature, especially during political uncertainty or global financial shifts.

• Counterfeiting can be a concern, particularly with higher denomination notes, so tourists should exchange money only at licensed outlets.

Common misconceptions

One misconception is that US dollars are widely accepted across Peru. While they are sometimes used in large hotels or tourist agencies, the vast majority of everyday transactions require local currency. Another misconception is that credit cards are universally accepted. While true in larger cities, many rural and local businesses operate on a cash-only basis.

Tips for managing money in Peru

Travellers and businesses dealing with Peru can benefit from a few practical strategies:

• Use ATMs in urban centres to withdraw local currency at competitive rates.

• Avoid changing money at airports due to high margins.

• Keep small change handy, particularly when travelling outside major cities where merchants may struggle to provide change for large notes.

• Use secure and official currency exchanges, such as banks or authorised casas de cambio (currency exchange offices).

For businesses:

• Monitor exchange rate trends if your company deals with Peruvian suppliers or clients.

• Use multi-currency accounts or hedging tools to manage fluctuations in the value of the sol.

• Be mindful of invoicing agreements—international contracts may be set in USD, while local suppliers may expect payment in soles.

FAQs

Can I use the US Dollar in Peru?
Only in limited places. It’s not widely accepted in regular shops or restaurants. Always carry soles for convenience.

What’s the best way to get soles in Peru?
Use bank-affiliated ATMs in cities. Avoid street exchanges or informal dealers due to risk of counterfeit notes.

Is the sol a strong currency?
While not among the strongest globally, the sol has shown consistent stability in Latin America, especially compared to past decades.

Are debit or credit cards accepted?
Yes, in major cities and larger retailers. However, always carry cash as card acceptance is limited in rural areas.

Real-life example

Imagine you're travelling to Cusco for a trek to Machu Picchu. While your hotel might accept payment in US dollars or via card, local taxis, market vendors, and many restaurants will only accept soles. You exchange £200 at a local bank and receive approximately 920 PEN (based on a typical rate of around 4.6 PEN to the pound). You use the money for transport, meals, and entrance fees — and you're able to avoid excessive bank fees or rejected cards by preparing ahead.