**3**

4. **A** major task of this system is the assembly of appropriate weights. The starting premise in the envisaged system of alternative conversion factors and corresponding weights is that the official exchange rate has a weight of **1.0** and all other rates implicitly assigned zero-weights. It is expected that further review and analysis of the trade and exchange system **by IEC** staff, and more information from and regular discussions with Regional economists on various exchange rates will, hopefully lead to the assembly of information on some distributional weights to be attachea to the various rates. Table **1** below illustrates the range of conversion factors and weights underlying this objective. It is expected that users and analysts can individually devise a set of simple rules to derive what may be called "the preferred" conversion factor.

Table **1:** EGYPT **-** System of Alternative Conversion Factors and Weights

||**1980**|**1981**|**1982**|**1983**|1984|**1985**|**1986**|**1987**|**1988**|**1989**|
|---|---|---|---|---|---|---|---|---|---|---|
|IternativeConversionFactors|||||||||||
|Principal(official)rate(IFSRF)<br>|**0.7000**<br>|**0.7000**<br>|**0.7000**<br>|**0.7000**<br>|**0.7000**<br>|**0.7000**<br>|**0.7000**<br>|**0.7000**<br>|**0.7000**<br>|**0.8516**<br>|
|Secondaryrate|**NA**|**0.7390**|**0.8317**|**0.8317**|**0.8317**|**1.3010**|**1.3503**|**1.5015**|**2.2128**|**2.5712**|
|**3.**Tertiaryrate|**NA**|**1.0100**|**1.1300**|1.1453|1.2543|**1.5488**|**1.8838**|2.1459|**2.5082**|2.6452|
|4.Parallel/blackmarketrate|**0.7609**|**0.8772**|**1.0236**|**1.1039**|1.2184<br>|**1.4588**<br>|**1.8975**<br>|2.1894<br>|**2.5082**<br>|2.6452|
|**5.**PurchasingPowerParityRate**(1970)/1**|**0.5917**|**0.5503**|**0.5893**|**0.6133**|**0.6553**|0.6914|**0.7849**|**0.9079**|**11850**||
|**6.**PurchasingPower ParityRate**(1980)/1**|**0.7000**|**(1.6510**|**0.6971**|**0.7255**|**0.7752**|**0.8179**|**0.9285**|1.0740|1.4018<br>||
|**7.**PurchasingPower ParityRate**(1987)/1**|0.4562|0.4243|0.4544|0.4729|**0.5052**|**0.5331**|**0.6052**|**0.7000**|**0.9137**||
|**8.**Merchandiseweightedconversionfactor|||||||||||
|Wei2hts|||||||||||
|**1.**Principal(official)rate(IFS_RF)|0.4350|0.4350|_0.43.0_|0.4350|0.4350|0.4350|0.4150|**0.3690**|**0.3200**<br>||
|Secondaryrate|**0.3150**|**0.3150**|**03150**|**03150**|0.1400|0.1400|**0.1830**|**0.2370**|**0.2880**||
|Tertiaryrate|**0.2500**|**0.2500**|**0.2500**|**0.2500**|0.4250|0.4250|0.4020|0.3940|**0.3920**||
|Parallew/blackmarketrate|||||||||||
|PurchasingPowerParityRate**(1970)**<br>PurchasingPowerParityRate**(1980)**<br>PurchasingPowerParityRate**(1988)**<br>Merchandiseweightedconversionfactor|||||||||||
|MemoItems|||||||||||
|Nominalexchangerateindex**(1980=100)**|**100.0**|**100.0**|**100.0**|**100.0**|**100.0**|**100.0**|**100.0**|**100.0**|**100.0**<br>|**82.2**|
|Realexchangerateindex**(1980=100)**/2|**100.0**|**93.1**|**98.6**|102.1<br>|109.4<br>|**115.2**|**129.7**|148.3<br>|**193.0**<br>||
|"WeightedAvg.ConversionFactor"|**0.7152**|**0.7898**|0.8490|**0.8528**|0.9540|1.1449|1.2949|1.4596|1.8445||

**/1** The purchasing power parity relationship is computed as R. **Wd,/,r),** where R. is the exchange rate in the base year **"0". Pd,** and P,,t are the domestic price index and **US** (or any other foreign country) price index, respectively, in time period "t" (see Chapter V below). /2 Nominal exchange rate index divided **by** relative domestic absorption deflator index; this shows the real exchange movement.