Tibet uses the Chinese Renminbi (RMB), or Yuan. The current rate of the yuan is about 8.3 to the US dollar, however, the rate changes often so check the current rate before you go.
Money Exchange
Obtaining RMB from automatic teller (cash) machines in Lhasa is now possible. There are ATMs in the central Bank of China branch and in a bank not far from the tourist center in the Tibetan quarters. If you are bringing foreign currency to exchange outside of banks (ie when traveling outside Lhasa), it should be US dollars and you should plan to have small denominations (twenties or lower) to change in local hotels. There is no blackmarket for currency exchange in Tibet.
Credit Cards
Credit cards are accepted at the more expensive hotels in the large cities such as Lhasa and Shigatse. Other than that, credit card acceptance is rare. This will undoubtedly change in the future but, right now, it means that you need to use cash for most transactions.
Costs in Tibet for daily living are much cheaper than in the West, although slightly higher than in some other Asian countries such as India or Vietnam. So, the cost is relative depending on from where you arrive. The one budget-breaker in Tibet, however, is transportation. If you stick to low budget hotels, bus transportation, and small eateries, you can get by on US$10-15 per day. However, if you rent a private car and driver and stay in nice hotels, you can expect to spend US$150 per day or more.
One of the best places for shopping is around the Barkhor, in the heart of Old Lhasa. You'll find prayer flags, fur hats, horse bells, saddles, bridles, copper teapots, jewelry, rugs, and fabric. Haggling is acceptable but maintain a sense of patience and humor.