The Dominican Peso, written as RD$ or referred to as DOP on some financial web sites, is currently (October 2003) selling at about RD$37 = US$1.  This is the rate the webmaster recently obtained at various cambios (money exchange) in Boca Chica.  The official rate is typically lower.
To see current official rates, click HERE

US Dollars or Dominican Pesos.
US Dollars can be used almost everywhere in the tourist areas, but your change will likely be in Dominican Pesos and store owners frequently take a peso or so off the exchange rate, in their favor.  Outside of the tourist areas however, Dominican Pesos are expected and it can be difficult to find a place to exchange your dollars.  Canadian and European currencies can readily be exchanged and change houses located throughout the tourist areas but generally are not accepted by merchants.  The same can be said about travelers checks.


US Dollars or Other Currency.
Note that it is almost always best to change only US Dollars for Dominican Pesos.  While various other currencies such as Canadian, English, Italian, German, Swiss, etc. can be exchanged for Dominican Pesos quite readily in the tourist areas, one will save 10-35% by first converting to US Dollars at a good rate before coming to the Dominican Republic and then changing US Dollars for Dominican Pesos.

Where to Change.
One option is to already have exchanged some money before you leave.  This saves you time but you need to do it where you can get a decent exchange rate. You can also use the below service to redeem any remaining Dominican Pesos after your trip back to your home currency, for the best possible rate.  I recommend the below link:

Upon arrival in the Dominican Republic, you will also have the opportunity to purchase Dominican Pesos at a change booth located right at the airport.  The cambio just before passing through immigration at the Santo Domingo airport actually pays as good of a rate of exchange for US Dollars as the best of the cambios, so go ahead and exchange your money at the airport if you like.  This is unusual compared to most international airport cambios.

Money can be changed for Dominican Pesos at many change booths located throughout the world in international airports but they give a poor exchange rate.  These should only be used as a last resort should you need to convert your Dominican Pesos back into another currency after you have already left the Dominican Republic.  I have seen change booths that will buy or sell Dominican Pesos in Newark and Miami airports.  Remember, foreign coin money is not accepted at any cash exchange.

Counterfeit Money / Damaged or Defaced Money
Be aware that counterfeiting is a problem (local and foreign currency).  When changing large bills (US$100), place a mark on each bill so that the cashier cannot return you the money, claiming it to be counterfeit.  Tell the cashier your bills are marked and show the mark to avoid any fast-switching.  When receiving Dominican pesos (RD$500 and higher), hold the bills flat out in front of you and tilt the bill towards and then away from yourself.  Look for the yellow fluorescent stripe about 1/2 inch wide, about 1 inch from the right edge, and running from the top of the bill to the bottom.  It will reflect when viewed from an angle but will not when viewed from directly overhead.

Please be aware that the country will soon no longer accept bills that have any markings of any kind.  Many businesses already will not except money that has been written on or bears ink stamps as was typical of cambios that wanted to identify money that came from them and that they certify as not being counterfeit.

Banks are one of the worst places to purchase Dominican Pesos but they are often the only choice when selling a currency obscure to the Dominican Republic or trying to cash a travelers check that has been refused elsewhere.  However, unless you are changing thousands of dollars, there really isn't much of a difference between the best and worst places to exchange your money.  

Most hotels will exchange a limited amount of Dominican Pesos for your foreign currency, but in exchange for this service, you will usually not receive the best exchange rate.

Located throughout the tourist areas there are many cash exchange houses.  These are the best places to change money.

J&F is a good place to change money in Boca Chica, located next to the Don Juan Hotel (west).
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Another secure place with the Western Union, located at the TriCom office directly behind the Don Juan Beach Resort.  There is also a calling center for making overseas calls.
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Beware of people changing money on the street, offering excellent exchange rates.  Not only is it illegal, most will attempt to scam you through slight of hand or some other trick and they are pretty good at it.

ATM Cards.
Your international ATM cards (Plus or Cirrus system compatible) will work in the Dominican Republic and you will get the official exchange rate less a 1-3% commission, however note that the "official" exchange rate can be as much as 10% worse than the rates offered at cambios.  There are ATM machines located throughout the country, especially in the larger cities and the tourist areas.  While convenient to use, I don't recommend using ATM cards accept as a last resort.  Should your card be retained by the machine, as happens even occasionally even where you live, you will waste a lot of time trying to get it back, that is, if you still have a week left in the country before you have to leave.  Still, these can be very useful should you find yourself short on cash.  

Keep in mind that a machine may work one day with your card, and the next day it may not (communications troubles, etc.).  You may have to try several machines to find one that works with your card on any particular day.  I found that the BTH Bank Machine (map location yellow 22) has been pretty reliable as a connection to the Cirrus money card network.

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Credit Cards.
Your credit card (American Express, Visa, MasterCard) will generally be accepted throughout the country with hotels, restaurants, and merchants but large purchases will often require that you present your passport.  The same rules used for computing the rate of exchange for ATM cards apply to credit cards.  You can also use your MasterCard or Visa to obtain emergency cash via a cash advance.  Just walk into any bank and ask to see a desk person.  If you do decide to use a credit card, monitor your statements closely, as some have reported fraudulent charges appearing after having used their cards in the Dominican Republic.  This of course is not unique to the Dominican Republic and can happen domestically as well.

Banco Reserva located in the side of Boca Chica Resort.
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Investing in Dominican Pesos.
Visitors will often be lured by stories of investment accounts paying 20-25% annual interest or more.  It is true.  But be aware that these investments are unsecured, that the interest is paid in Dominican Pesos, and if history repeats itself, the value of the peso compared to the US Dollar could fall very quickly.  Thus, the interest rate is commensurate with the risk involved.

Money Transfer - Options for Sending Money.

Western Union
Western Union is popular and convenient.  Transaction costs run about US$80 per US$1000 sent.  Frequent users can send up to $2000/month.  Transfer is immediate.  Recipients pickup their money at any Western Union office.  Users can pay at any Western Union location, by credit card from their web site, or by credit card over the phone.

Visa Buxx.
A VISA debit card is issued in the name you specify and delivered to the address you specify.  It's use is limited to funds available in the Visa Buxx account.  You add funds via a web site and the funds can come from a credit card or a bank account.  Fees are US$3 for every US$250 deposited to the card (can be done on-line and via your credit card).  Up to US$988  can be credited to the card per month.  That's US$1000 including the $3 fee on each of 4 transactions of US$247.

Bank ATM card.
The least costly option is to open a new checking and savings account.  Do not link them, and get ATM cards issued for each.  The ATM card for the checking account may be offered as a Debit card as well.  The person to whom you wish to send money gets the ATM card associated with the checking account.  If it is a Debit card, they can also use it like a credit card, subjected to a credit limit equal to the amount of money in the account.  Note that debit cards do not offer the same fraud protection that credit cards offer and if stolen, could be used to empty the account with no recourse.

Ask that the checking account be linked to the ATM card for the Savings account. 

To send money, use the ATM card to deposit into savings and then transfer it to checking.  Optionally, the sender can deposit money into the savings account via an on-line banking transaction.  The bank machine transaction withdrawal limit is irrelevant, I've been able to withdraw RD$20,000 in a single transaction and repeat up to the daily limit of the card.

Be aware that giving your bank card to another person is usually in violation of bank agreements.

Bank Transfer.
I would recommend against this because I recently read a report that a reputable bank received money transferred from the USA and then refused to put it in the valid recipient's account, effectively stealing the entire amount.  That said, there are usually fees on the order of US$35 for both the sender and the receiver participating in a bank transfer, also known as a wire transfer but I've seen some institutions that do not charge to receive or charge less than US$10.  Banks will generally use the official exchange rate, which is always lower than that being paid by cambios in the DR and often not as good as credit and ATM cards, which themselves always pay slightly less than the street rate.

I personally tried to wire money from an American bank account to a Banco Popular account and the receiving bank, after 1 week was still unable to receive the money and I had to cancel the transaction.  This cost me fees and time.