The currency in Egypt is the Egyptian Pound (worth about sixteen cents as of April 2004).
1:00 USD = 6.16 EGP
1.00 EGP = 0.162 USD
However, most upscale hotels expect US Dollars or Euros, and price their hotel rooms in these currencies. Most hotel will take payment in Egyptian Pounds, but prefer Dollars or Euros. This seems to be common in most of the "tourist" industries. Fees for sites and museums are in Egyptian pounds, however.
This is definitely a cash economy, and the amount of physical bills passing hand-to-hand on any given day is astounding. It's hard for tourists to get the smaller bills (25 or 50 piastre notes, or even 1 pound notes), which you have for tips and other minor expenses. Banks are loathe to give them when you change money, and many shops will round UP to avoid having to give you a small note (I once got a pound note for change when I should have gotten about 60 piastres, because the shopkeeper didn't want t part wit the smaller piastre bills and coins. I was surprised to even get a single pound). Asking for change for a large bill will often entail the shopkeeper canvassing the other shops on the street for enough to give you change. Don't accept 50 or 100 pounds notes when changing money unless you absolutely have to -- a 20 was about as large as we ever got away with using easily.
We did discover quite late in the trip that the easiest way to get one pound notes was to get an airport cart -- the cost was two or three pounds, and the "keeper of the carts" seemed to always have wads of cash. He was never happy to part with eighteen pounds in change, but it usually worked for us. If your guide is amenable, they can often negotiate change for you with locals. We missed one opportunity to get small bills -- a caretaker had been given a 1 EURO coin, and wanted to "cash it in" for either dollars or pounds (coins are not much liked in Egypt and you should not use them for tips). The language barrier was enough that we were unable to offer to exchange his euro very generously if he would give us 20 one pound notes in exchange for a 20 pound bill. Keep an eye out for that kind of opportunity.
A couple of tips for dealing with money:
- Count your change carefully. I don't mean to suggest that anyone is attempting to cheat you on purpose, but we got shorted a couple of times with big piles of small bills, and we got extra back at least twice.
- There are 50 pound and 50 piastre notes -- make sure you know the difference!
- Don't tip with non-Egyptian coins. Most people have no way of changing them.
- Always ask for (and negotiate, if necessary) a price up front, for anything -- ad hoc "guides", taxi drivers, shoe shines, ice cream from a street vendor. It is much easier than negotiating afterwards.
Most travelers no longer rely on travelers checks -- the proliferation of ATMs and credit cards to get cash make them less useful now than they were. We get them for free, so we tend to carry them as "backup" money that is safer than cash. That, and I'm always a bit leery of sticking my only credit card into a foreign ATM. We have been decreasing the amount we carry, though, down to "emergency-get-to-the-airport" money, and we carry credit cards and debit cards when traveling.
Exchange only a little cash at the airport before you leave, so you have enough money to deal with getting to your hotel, but be warned that the exchange rates suck at airports (at least they did for us). Bank exchange rates in Egypt were much better. ATMS are actually pretty accessible in Cairo (like most non-US ATMs, they require a four-digit pin) and offer probably the best exchange rate. Finally, there is apparently a thriving black market for US and EURO currency, but we didn't have anything to do with it. It's illegal, so ask at your own risk.