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For exploring the Sacred Valley, a car is the best option. The vehicular tourist route ends at Ollantaytambo. Cusco is the only place to rent a vehicle. However, you won't need or want to drive inside the city; heavy traffic, lack of parking, and narrow streets, many of them pedestrian only, make a car a burden. Driving anywhere in Peru seems to have its own unwritten rules, so hiring a car and driver or going by taxi is the usually the safest option.
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