You land at Tocumen International Airport, ready for the heat of Panama City, and your first instinct is to find a currency exchange booth. Stop. Honestly, just keep walking. If you’ve got a wallet full of "greenbacks," you’re already holding the local cash.
Panama is a bit of a financial anomaly in Latin America. While the country technically has its own currency, the Panamanian balboa, the reality on the ground is that the United States dollar does all the heavy lifting. It’s been this way since 1904. That’s right—Panama was actually the first country in the world to fully "dollarize" its economy, and they did it just a year after becoming an independent republic.
The Weird World of Panama Currencies and the United States Dollar
If you walk into a Super 99 grocery store in Casco Viejo, the price tag might say "B/. 5.00." Don't let the symbol throw you. That's five balboas, which is exactly five U.S. dollars. There is no math involved. No mental gymnastics. No checking a conversion app every five minutes. The exchange rate is pegged at a permanent, unchanging 1:1.
But here is the kicker: you will never see a balboa bill.
Panama doesn't print its own paper money. The National Assembly actually passed a law back in the day (specifically under the 1904 Monetary Convention) that essentially said, "Hey, let's just use the U.S. dollar for everything paper." So, when you pay for a pipa fría (cold coconut) on the street, you’ll hand over a $1 bill or a $5 bill printed in the States.
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Why the Balboa Still Exists (In Your Pocket)
So, if the dollar is king, why do people keep talking about the balboa? Because of the change. Panama mints its own coins, and they are everywhere.
You might get a handful of change back and see a mix of George Washington's face and the armored bust of Vasco Núñez de Balboa. These coins are identical in size, weight, and metallic composition to U.S. quarters, dimes, and nickels. In fact, if you drop a Panamanian "quarter" (a 25-centésimo coin) into a vending machine in Ohio, the machine probably won't even know the difference.
There is one specific coin that catches travelers off guard: the "Martinelli." Named after former President Ricardo Martinelli, who introduced them around 2011, these are gold-and-silver colored 1-balboa coins. They look a lot like a 1-euro or 2-euro coin. Locals use them constantly, but be warned—you can’t spend these once you leave Panama. No bank in the U.S. or Europe is going to take a bag of Martinellis off your hands.
A Century of Economic Stability
Most people wonder why a sovereign nation would give up control of its own money. Usually, when a country has its own central bank, they can print money to pay off debts. Panama can't do that. Since they don't have a central bank to "devalue" the currency, they have historically enjoyed some of the lowest inflation rates in the world.
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Think about the 1970s or the early 2000s when neighboring countries were dealing with hyperinflation that turned life savings into literal scrap paper. Panama just cruised through. Because the panama currencies united states dollar link is so tight, the country became a magnet for international banks.
Today, Panama City looks like a mini-Manhattan, filled with glass skyscrapers. That isn't an accident. It's the result of a "hard" currency that investors trust. You don't have to worry about a sudden 20% drop in your investment because the local politician decided to print more bills.
The Logistics: ATMs and Cash Culture
While Panama is quite modern, it is still very much a cash-heavy society once you step outside the fancy malls of Multiplaza.
- ATMs (Cajeros): You’ll find them everywhere. They dispense U.S. dollars. Most will charge a fee—usually around $5.25 or $6.00—for international cards.
- The $50 and $100 Problem: This is a big one. Most small shops and taxis will flat-out refuse a $50 or $100 bill. There is a deep-seated fear of counterfeits. If you go to a bank to change a $100 bill, they might even ask for your passport and make you sign a form. Stick to $20 bills.
- Taxis: Taxis in Panama City don't use meters (mostly). You negotiate the price before you get in. Since the currency is the dollar, it’s easy to haggle, but always make sure you have small bills. Handing a taxi driver a $20 for a $3 ride is a great way to hear "I don't have change, amigo."
Breaking Down the "Dual" System
Technically, Panama is "bi-monetary." You’ve got the balboa as the unit of account (how things are priced) and the U.S. dollar as the medium of exchange (how you actually pay).
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It’s a weirdly symbiotic relationship. The U.S. benefits because there is a massive demand for its currency, and Panama benefits because it hitches its wagon to the world’s reserve currency.
If you're coming from Canada, Europe, or the UK, you should still bring U.S. dollars or withdraw them from an ATM. Don't bother trying to find a place that exchanges Euros for Balboas in a small town like Pedasí or Boquete. It’s either not going to happen, or the rate will be highway robbery.
What You Should Do Before You Leave
Honestly, the best strategy for handling money in Panama is "The 20s Rule."
Before you leave the U.S. (or your home country), go to your bank and ask for $200–$300 in nothing but $10s and $20s. This will save you more headaches than any travel guide can explain. When you're in the San Blas islands or buying a handmade mola from a Guna Yala artisan, having that $5 bill is the difference between a smooth transaction and an awkward "I guess I'm buying three of these" moment.
One last thing: check your pockets before you head to the airport. Those shiny 1-balboa coins are great souvenirs, but they are worthless the second the plane wheels leave the tarmac. Give them to a local charity box or spend them on a last-minute bag of coffee at the terminal.
Your Actionable Move: If you are planning a trip, skip the "currency exchange" counter at your home airport. Wait until you get to Panama and use a "Sistema Clave" ATM or just bring U.S. cash you already have. Use credit cards for hotels and big dinners to get the best protection, but keep $40 in small bills in a separate pocket for the "real" Panama.