Your right! Jewelry and Alpaca can be bought in many places in both Cusco and the Valley. I was in Pisac just a few weeks ago, and I was surprised to see just how many new jewelry shops (off the main plaza) had opened.
They will accept $$ and Soles, but you are probably better off exchanging your $$ and paying in Soles as you will get a better exchange rate.
Soles. Not dollars.
Peru is the second biggest producer of silver in the world and also has one of the best handicrafts as well.
Buying silver and gold jewelry in Peru is a great idea.
There is lovely handmade silver jewelry. My advice would be to checkout the high end stores like Ilaria and Inca Treasures first to see what the "good stuff" looks like, and then look around the city to see if you can get a bargain.
I love buying jewelry wehn I am there. Our wedding rings were made and purchased in Lima.
You are gonna find a ton of great items and it will be hard to decide what to not get!
You will be better off paying in soles.
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