Government re-introduction of the forex auction system -- as Zimbabwe effectively re-dollarises - could have disastrous consequences because the country does not have adequate sources of foreign currency, economic commentators have warned.

However, most companies cannot afford the forex auction system and are likely to source forex on the parallel market, fuelling the exchange rate.

On Wednesday, the Ministry of Finance announced the US dollar allowance, while the Reserve Bank of Zimbabwe governor John Mangudya introduced a forex auction system and also directed shops to display prices in both local and foreign currency.

The forex trading system has previously failed and was abandoned in 2005 when then central bank governor Gideon Gono replaced it with the exchange rate float.

Last year, the government introduced a mono-currency system, but self-dollarisation was set in motion because the local currency fast lost value, culminating in the government caving in.