Question 22: Required
You are permitted to use your curriculum to answer this cultural question in English.
In English & according to our curriculum, describe the value of the Panamanian balboa compared to the U.S. Dollar AND why it is that value.
If the “why” is left off of the answer, only half credit will be earned.
Use some of this information:
Shopping in Panamá
Panamá's official currency is called the balboa, in honor of the Spanish explorer, Vasco Núñez de Balboa, who is credited with being the first European to reach the Pacific Ocean from the American continent. The U.S. dollar is also legal currency in Panamá, and the two have been equivalent since 1903. So if you exchanged your U.S. money, you would get the exact same amount in Panamanian money.
However, balboa bills don't even exist anymore. They are not being minted, and everyone uses U.S. dollars. What you will see in circulation are Panamanian coins. These are equivalent to U.S. coins, although they have different names. A centésimo is a penny, or one cent. There are coins in denominations of 5¢, 10¢, 25¢, and 50¢, with values corresponding to the U.S. nickel, dime, quarter, and half-dollar.
You might be wondering why Panamá doesn't exclusively use its own currency. Well, for one thing, Panamá's economy is based largely on trade and commerce. Because the U.S. dollar is the currency used for international commerce, using it in Panamá makes trade much simpler for everyone involved—buyers, sellers, intermediaries, and banks.
Also, the system of using U.S. dollars as the legal currency has brought Panamá monetary stability over the years. There's no worry about whether Panamanian currency is going to devalue, increase in value, or remain the same, and this provides a sense of security for investors and businesses in Panamá.