Iran denied on Saturday reports that the country had prohibited financing for imports of products from the United Arab Emirates.

"Banking transactions between Iran and UAE are being continued as before and they have not stopped," state TV reported.

An Iranian lawmaker said on Friday the country had banned the opening of letters of credit for importing products from UAE. A letter of credit is a form of financing used in international trade for deals between a supplier in one country and a customer in another.

While some Western countries have imposed tight sanctions on trade with Iran over its disputed nuclear programme, the UAE has served as a conduit for trade between Iran and other countries.

But Western pressure may be mounting on the UAE and other of Iran's neighbours to limit that trade.

Recent data from the UAE customs authority shows that 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 - totalled Dh19.5 billion ($5.3 billion) in the first six months of this year, up from Dh14.3 billion a year earlier.

Dubai in the UAE has a large community of Iranian traders. – Reuters