Iran has outlawed the use of letters of credit for goods imported from the United Arab Emirates as well as transactions carried out in dirhams.
The move comes after the UAE announced on Tuesday that it is considering Western-style sanctions against Iran.
The head of Iranian Parliament’s economic commission told the Mehr News Agency that letters of credit (LCs) for UAE imports were suspended two days ago because Iran expects its trade partners to resist U.S. pressure.
LCs are bank commitments that buyers show sellers as proof of payment. The letters guarantee payment by the bank.
Iran has been the main destination for exports and re-exports from the UAE. Iran reports that imports from the UAE over the past eight months were worth $12 million, while Iranian exports to the UAE were worth $3 billion.