The raging violence in several parts of Syria and the Syrian pound's depreciation have sent bad signals about the overall landscape in the country and caused a downturn in the country's stock exchange.

Trading on the Damascus exchange has almost halted in recent months as violence escalates in the capital Damascus and other cities across Syria. But exchange officials say they remain committed to operate.

The Damascus Securities Exchange (DSE) general index has lost more than 40 percent of its value since the outbreak of violent events in Syria in mid-March 2011, and indicators show that gloomier days lay ahead.

Financial expert Wael Habash told local media that the dip in the bourse is to be mainly blamed on the rise in the exchange rate of the dollar.

He said "At this time we must maintain the situation of companies listed on the Damascus Securities Exchange in order to avoid further decline."

He added that there are some stocks that have been suffering from losses over the past two years and these companies should, according to the laws and regulations relating to the market, pull out of the market, but the DSE is overlooking them because of the exceptional circumstances the country is passing through.

Yet, he indicated that there are some stocks that still maintain their values for several months, and others have gained profits and their financial performance was satisfactory. "So the picture is not almost so dim," said Habash.

The volume of share dealing at the DSE exchange has reached by the weekend 21.765 with a dealing value amounted to 1.653 million pounds (20,000 U.S. dollars).

The pound has shed about 60 percent of its value on the unofficial market, a slump that economists in Syria attribute in no small part to the effects of several rounds of sanctions on the country and the misguided fiscal management by the government.

The exchange rate of the Syrian pound has depreciated after maintaining a stable price for few months against the dollar.

The losses of Lebanese banks operating in Syria have been estimated at 400 million dollars during the 20-month-old conflict, Lebanon's Central Bank Chief Riad Salameh had reportedly said.

Some bankers in Syria have raised their voices, suggesting an immediate rise in the interest rates in response to the losses incurred by the banks.

Most countries have showered Syria with non-stop economic sanctions to throttle the Syrian government and speed up its collapse. The banking sector was still the hardest hit by those sanctions.

Fadi al-Jlailati, a financial and banking expert, told a local paper that it is impossible at the current stage to reduce the debit interest rate, as this should be accompanied immediately by a reduction of the credit interest, while what is required at the current circumstances is a gradual rise in the credit interest.

He said any higher interest rate on deposits will go in parallel with an increase in the debit interest rates to maintain a margin of profits at the banks to be able cover the costs of bank lending.

Jlailati indicated that countries usually raise the interest rate during crises and wars to fight the inflation and limit the process of converting the local currency into hard currency.

He argued that reducing the debit interest rate on loans will reinvigorate the national economy and contribute in pushing forward the growth path and ultimately lead to lower prices and thus raise the growth rate of the gross national product.

In contrast, observers believe that any rise in the credit interest rate should be well studied because of its impact on the absorption of liquidity that is now required to be injected in the markets to revitalize the economic cycle.

They believe that the rise in the credit interest may have undesirable implications deflationary.

The slump in the stock exchange and the depreciation of the Syrian pound will have effects on other kinds of business in the country.

A recent government bulletin concerned with monitoring drought in the country said there is a significant decline in the economic conditions of rural households in the southern provinces, particularly in Damascus' countryside and Daraa.

In general, the bulletin said the economic conditions are in recession in the northeastern provinces and in most areas of the desert, and are acceptable in the central and coastal provinces.

In October, a bulletin issued by the project of early warning of drought with the cooperation of the Ministry of Agriculture and the UN Food and Agriculture Organization showed that 41 percent of a household in remote areas go through difficult conditions and 39 percent of them are in a very harsh condition.

According to the pro-government newspaper al-Watan, more than 50 percent of the families in the desert and rural areas are passing through very difficult living conditions with increasing financial burdens, especially in the central province of Homs and the northeastern provinces of Hasakah and Deir al-Zour due to the rising food prices.