Panama uses the U.S. dollar.
Foreign exchange sites may claim that Panama's official currency is the Panamanian Balboa, however this is not the case. Panama uses the U.S. dollar to pay for stuff. Even ATM machines dispense US currency. Panama does not create its own paper money, instead relying on the US dollar as legal cash. This is absolutely one of the things to know before traveling to Panama.
The only exception is the Panamanian coins, which come in denominations of 1, 5, 10, 25, and 50 cents, as well as a single Balboa coin. They are the same size, color, and weight of US coins and are used interchangeably. A "$" (dollar) or a "B/" (balboa) sign can be used to indicate a price. It makes no difference because they both signify the same thing and have the same value.
The value of the Panamanian Balboa is equal to that of the US dollar so that Panama uses the U.S. dollar. Withdrawing cash from an ATM incurs a cost, and your bank may levy an exchange fee. Bring some cash from home, preferably little amounts. Vendors aren't always able to provide change due to a lack of cash.
