The american dollar is the standard currency in use in Panama, so visitors with american currency don't need to exchange money.
Technically the official currency is the Balboa, however, in 1941 Panama stopped printing the Balboa in favor of using the american dollar. Panama does still mint coins in the denominations of 1, 5, 10, 25, 50 and 100 which are the same metal, size and shape of the equivalent american coins. Since the Balboa has had a fixed exchange rate of 1:1 with the US dollar since 1903, these Balboa coins are used interchangeably with the US coins, so you may end up with Balboa coins during your Panama travel.
Note that since the coins are identical in shape and size to U.S. coins, they will work in U.S. vending machines even though the images on the coins are Panamanian.