(Updates to reflect afternoon trading)
JOHANNESBURG, Jan 19 (Reuters) - South Africa's rand retreated from a two-and-a-half year high on Friday as a rally driven by a weaker dollar and optimism about the prospects for change under the new leader of the ruling African National Congress (ANC) ran out of steam.
At 1541 GMT, the rand was 0.6 percent weaker on the day at 12.2125 to the dollar.
Earlier in the day it hit its strongest since June 2015 and was still on course for gains of around 1.2 percent this week despite Friday's losses.
"The rand is exceptionally strong after the 'Cyril honeymoon', so we're seeing some consolidation after recent gains," said Phillip Pearce, a currency dealer at TreasuryOne.
The rand has risen over 7 percent against the greenback since mid-December when Cyril Ramaphosa won the race to succeed President Jacob Zuma as leader of the ANC.
Ramaphosa has promised to fight corruption and kick-start economic growth. But some analysts are sceptical that he will deliver on those pledges, given that the ANC remains hugely divided on major policy issues and on whether Zuma should step down early to allow Ramaphosa greater room to pursue reforms.
On the equities market, the Johannesburg All-share index was little changed on Friday at 60,912 points, while the Top-40 index inched up 0.09 percent to 54,058 points.
Wal-Mart's South African unit Massmart closed 2.84 percent lower at 140.40 rand, clothing and homeware retailer The Foschini Group fell 2.43 percent to 184.89 rand, while rival Mr Price declined 2.31 percent to 252.24 rand.
"Retailers and banks that have been strong over the last couple of days are taking a breather this afternoon. It's a typical Friday afternoon, where you find a lot of the traders will take profit where stocks have run hard," Independent Securities trader Ryan Woods said.
Government bonds were steady, with the yield on the benchmark 2026 instrument flat at 8.49 percent. (Reporting by Alexander Winning and Nqobile Dludla; Editing by Keith Weir)
Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.