The Panamanian balboa is pegged to the U.S. dollar at a 1:1 exchange rate, meaning that their values are equivalent. This is due to Panama's use of the U.S. dollar as its primary currency for transactions, and the balboa exists mainly in coin form alongside U.S. currency. This arrangement provides stability and facilitates trade and investment.
How does the value of a Panamánian balboa compare to that of a U.S. dollar, and why is this so? Write your SHORT answer in English.
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