In this picture taken on Monday, Dec. 26, 2016, a currency exchange bureau owner counts U.S. dollars in downtown Tehran, Iran. (AP Photo/Vahid Salemi)
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For traders in Afghanistan's main currency exchange, U.S. sanctions against Tehran have created the ultimate arbitrage play – one that involves frequent trips to neighboring Iran with smuggled cash. At the bustling, three-story Sarai Shahzada market in Kabul, one trader sitting in a booth piled high with grimy banknotes explained how he and others use taxis to bring suitcases full of U.S. currency into Iran through Afghanistan's remote Islam Qala border crossing. Traders generally travel from Afghanistan's Herat province to Iran's second-biggest city, Mashhad. They use U.S. dollars to buy rials from desperate Iranian sellers at black-market rates in excess of 120,000 rials to the dollar. Traders can get the best prices for rials in Afghan provinces that border Iran, rather than in Kabul, said a second trader. One trader said there were willing buyers for the rial – including local currency dealers – in Afghanistan's Nimruz and Farah provinces bordering Iran, where the rial is an accepted form of currency and Iranian wheat, flour and rice are sold in local markets.
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