Major money exchange houses in the UAE have stopped handling Iranian rial. Iranian businessmen had used the exchange houses to transfer funds outside the banking system.
"Most exchange companies have stopped dealing in Iranian rial mainly because of its devaluation in the last few months, as well as the regulations imposed by the U.S. regulatory authorities on the financial sector," said Mohamed al-Ansari, chairman and managing director of Al Ansari Exchange, one of the UAE's top two exchange houses. "As such, nobody would like to risk trading in the Iranian rial currency, as it would affect their business." [Reuters, 15 March].
Dubai, 150 kilometers (100 miles) across the Persian Gulf, has been a major trading hub for Iran. Re-export trade between Iran and the UAE -- goods sent to the UAE for on-shipment to Iran, and Iranian goods sent to the UAE for on-shipment to other countries – totals $12 billion annually.
However, hawala channels are still used for Iranian trade with Dubai. Hawala is a legal but largely unregulated money transfer network that is based on personal relationships and operates in the Middle East and South Asia -- and even transfers of physical cash between Dubai and Iran across the Gulf on ferries.
Source: Reuters, 15 March 2012