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It depends on the exchange rate you can get at the local currency shop. Most places down there offer 9 pesos to $1USD, and if you're lucky you might find 10 to 1. Otherwise, there are lots of local exchange shops (even at the airport) that would take your US dollars.
Also, there are bi-lingual bank machines that give out pesos from your debit card at current exchange rates (this prevents you from carrying large amounts of cash).
P.S. you'll be able to get a better deal on things if you deal in pesos.
Dagen
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