Panama Currency Guide: Everything You Need to Know

January 18th, 2024

Do you plan on traveling to Panama, or are you simply interested in the country's currency system? In either case, you're at the right place!

This all-in-one Panama currency guide covers everything you need to know about the currency in Panama, including a quick Panama currency history recap as well as exchange rates, currency denominations, payment methods, travel tips, and much more.

Without further ado, let's dive right in.

The Panama Currency Chronicles: A Quick History & Evolution Recap

In 1821, Panama became part of Gran Colombia – a federation led by the revered Simón Bolívar. The struggle for autonomy persisted, marked by shifts in alliances and a longing for self-governance. Panama's desire for independence reached its zenith in the early 20th century. In a strategic chess move, Panama, supported by the United States, declared its independence from Colombia on November 3, 1903.

The bold move laid the foundation for the creation of the Panama Canal Zone, a pivotal juncture in global trade and Panama's destiny. The 1972 Constitution established Panama as a sovereign nation with constitutional democracy. However, it continued to be burdened by a series of corrupt governments and questionable election practices.

The U.S. intervened in 1987, imposing sanctions, and invaded Panama in 1989 to establish a new Panamanian government. Stability was restored in the 1990s, continuing into the 2000s.

Panama Money Early Roots: The Birth of the Balboa

Panama's monetary journey began with the establishment of the Panama Canal Zone in 1904, under U.S. control. During this period, the Panamanian balboa made its debut, replacing the Colombian peso, after gaining independence. Panama introduced the balboa as its official currency, named after the Spanish explorer Vasco Núñez de Balboa.

The balboa shared a parallel existence with the U.S. dollar, with an exchange rate pegged at 1:1, reflecting the influence of America's presence and the dollar as a safe-haven currency.

Dollar Dominance (1941-Present)

The Panama currency’s coexistence with the U.S. dollar took a unique turn during World War II:

  • Due to metal shortages, Balboa coins were minted in the U.S., creating a fascinating blend of Panamanian imagery on American coins.
  • In 1941, an agreement solidified the permanent use of the U.S. dollar as Panama's official currency.

Fun fact? In 1941, President Dr. Arnulfo Arias introduced Article 156 of the Panamanian Constitution, allowing both public and private banks to issue Balboa banknotes. This led to the establishment of the Central Bank of Issue of the Republic of Panama. However, a week later, a military coup led by Ricardo Adolfo de la Guardia Arango ousted Arias from power.

The new government promptly halted the banknote issuance, closed the bank, and ordered the incineration of all 2.7 million notes issued up to that point. Today, surviving examples of these notes, known as the "Seven Days' Notes" or "Arias issues," are highly valuable collector's bills due to their rarity.

Balboas in Your Pocket (1983-Present)

While used interchangeably with the U.S. dollar, the Panamanian balboa persists in coin form. Some interesting tidbits include:

  • Balboas and U.S. dollars share wallets seamlessly, making everyday transactions a diverse mix of this currency arrangement.
  • Balboa coins, with unique designs depicting local flora and fauna, add a touch of Panamanian pride to pocket change.

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Panama's monetary landscape in the 21st century is characterized by a blend of U.S. dollars and Balboas continuing to facilitate transactions. Also, advances in digital currency and global financial integration are influencing Panama's economic strategies, promising an exciting chapter in the currency saga.

Panama Currency Today: A Dual-Currency System

us dollar and panama money

Does Panama have two currencies? Yes! To sum it all up, today, the official currency in Panama is the Panamanian Balboa (PAB), at par with the US dollar, which is the legal currency (tender). Panama doesn't have its paper currency and instead uses US dollars for everyday transactions.

But what coin money is used in Panama? While US currency is preferred, some denominations of Panamanian coins are used interchangeably with US coins. These Panamanian currency coins are divided into 100 centésimos, such as the one-centavo, five-centavo, ten-centavo, 25-centavo, and 50-centavo coins circulating alongside their US equivalents.

Traveling to Panama? Here's what You Need to Know about Panama Currency

Panama is a fascinating country located in Central America, a piece of land that connects North and South America and boasts a mix of historical, cultural, and natural attractions. Whether you're planning a trip to Panama City, exploring the Panama Canal, or admiring the country's beautiful beaches and mountains, you'll undoubtedly need to use Panama money at some point.

That's where we come in. We'll teach you the basics of Panama currency, how to exchange foreign currency, the best payment methods, and much more.

Exchange Rate and National Banks

If you're traveling to Panama, you'll need to exchange your foreign currency for US dollars or have a credit card that you can use in Panama. You can exchange money at currency exchanges, banks, or ATM machines located throughout the country.

However, it is recommended to exchange money at national banks, like Banco Nacional de Panama, since they tend to offer better exchange rates than currency exchanges. Panamanian banks are more trustworthy and safe compared to currency exchanges and usually offer a better rate of exchange.

What Is the Best Currency for Panama?

Both currencies are widely accepted throughout the country, so you can’t go wrong with using either currency in Panama. Travelers often find it convenient to carry U.S. Dollars for transactions, as they are widely accepted and used in everyday business, making it the preferred choice for many visitors. Also, the balboa isn't printed on notes.

Panama's strategic use of the US dollar sets it apart from neighboring non-dollarized nations, providing a unique advantage. Unlike those countries grappling with the uncertainties tied to exchange rates, Panama enjoys a competitive edge by seamlessly navigating its economic landscape with the stability and convenience offered by the US dollar.

Using Your Panama Currency: Payment Methods in Panama

In Panama, cash is still king, but credit cards are becoming more popular. Additionally, many fancier restaurants, tourist shops, and large hotels accept payment through American Express,

MasterCard, and Visa. However, you should always have some cash on hand, especially when traveling to smaller towns or budget hotels.

Also, always carry some smaller dollar or Panama currency denominations since some places might not have change for larger denominations.

Panamanian Coins and Paper Currency

Panama doesn't have paper currency, which means US banknotes are used instead. As mentioned earlier, some Panamanian coins are used alongside US coins, but there are also commemorative and silver coins that you can purchase as souvenirs.

Commemorative coins are made to honor a specific event or person, while silver coins are made of pure silver and often feature a traditional Panamanian design.

Panama Money Tips for Travelers

panama travel

  • Check the exchange rates at different locations and go with the one that offers the best rate. Stay informed about current exchange rates to get the best value for your money. You can apply for our exchange rate alerts to stay in the loop.
  • Withdraw the money you need from an ATM instead of exchanging cash at currency exchanges. Exercise caution when using ATMs, especially in secluded areas. Opt for ATMs in well-lit and populated areas, and be discreet with cash to minimize the risk of theft or scams.
  • Avoid using credit cards for small purchases since some places might charge you an additional service fee for using them. Before using your credit or debit card, inquire about any foreign transaction fees. Inform your personal bank of your travel dates to prevent any unexpected issues with international transactions.
  • Bargaining is not a common practice in Panama, except in markets and among street vendors. Be polite and engage in a friendly manner when negotiating prices, keeping cultural sensitivities in mind.
  • While credit cards are commonly accepted in urban areas, having cash on hand is advisable, especially in more remote locations. Keep smaller denominations for everyday transactions. Panamanians might prefer exact change, especially in local markets or taxis.
  • While English is widely spoken in tourist areas, having some basic Spanish phrases can be beneficial, especially when dealing with smaller vendors or in more remote regions.

Concluding Notes on Panama's Dance of Dollars and Coins

We hope this guide to Panama currency has been informative and helped you understand how to manage your money while traveling to Panama. As you delve into the vibrant markets or engage in everyday transactions, the jingle of coins tells a tale of Panama currency culture, where Balboas and US dollars share a harmonious dance in the pockets of locals and visitors alike.

Remember to always have some US dollars or Panamanian coins on hand when exploring the country, and make sure to exchange your foreign currency at national banks rather than currency exchanges. At US First Exchange, we make international transactions convenient and secure. Buy and sell any currency with our secure online platform and insured shipping options, and follow our tips to enjoy all that Panama has to offer without breaking the bank.

Safe travels!

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