Nicaragua’s currency is called the córdoba (denoted as C$) which is dived into 100 centavos (¢). Introduced in 1912, the currency was named in honor of conquistador Francisco Hernandez de Córdoba, the founder of both the Spanish colony of Nicaragua, and the historical cities of León and Granada; his picture can be seen on the rarely used centavo bills.
Córdoba bills, which are often also referred to as pesos, are available in the following denominations: C$500 (red), C$100 (blue), C$50 (purple), C$20 (orange), C$10 (green). Coins are minted with the values C$5, C$1, 50¢, 25¢, 10¢, and 5¢. Unusually, Nicaragua also has small Monopoly-like bills with the values of 25¢, 10¢, 5¢, and 1¢. The one centavo note has a value of roughly 1/2000th of a dollar and has little use, even in Nicaragua.
Along with córdobas, US dollars ($) in reasonably good condition are also widely accepted. You will always, however, get your change back in córdobas. If you intend on bringing money into the country, then dollars are the only choice, as other major currencies including the euro (€) and pound (£) will be practically impossible to use or exchange. Costa Rican colónes (¢) and Honduran limpiras (L) are also very difficult to exchange away from their respective borders. Although it is possible to use the dollar in most places, carrying córdobas is a good idea since dollars are not excepted as payment on buses, for example. Many small shops and restaurants may also round the exchange rate up.
Large denomination notes of both currencies ($20, $50, $100, $500 and C$100) can be extremely hard to use or exchange, especially outside of Managua. Vendors of all stripes are reluctant to except large bills due to the fear of counterfeiting, or simply because they don't have enough change.
The following exchange rates were correct as of Febuary 2009.
US$1 = 18 C$
€ 1 = 22.7 C$
For current exchange rates visit: finance.yahoo.com/currency-converter