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JOHANNESBURG, May 26 (Reuters) - South Africa's rand rose half a percent against the dollar on Friday, a day after the Reserve Bank kept rates on hold and played down the prospects of cheaper borrowing costs, encouraging investors in search of yield to pour money in.
Stocks were generally flat, tracking global equities marginally lower as uncertainty over the future of President Jacob Zuma led investors to shun riskier assets.
At 1421 GMT, the rand traded 0.58 percent firmer at 12.8500 per dollar, off a two-month high touched early in previous session.
"The South African currency has strengthened in line with other emerging market currencies on the back of large inflows into emerging bond markets," NKC African Economics analysts said in a note.
"International investors continue to find real yields on South African bonds attractive despite heightened risk."
Local investors, though, exercised caution ahead of the African National Congress' monthly meeting, amid rumours the ruling party may seek the removal of President Jacob Zuma - an event most political analysts consider unlikely.
Zuma has faced large street protests and calls for his resignation from the opposition and some factions of the ANC after a series of corruption scandals and allegations of influence peddling. He denies any wrongdoing.
In the equities market, the All-Share index inched 0.06 percent lower to 53,996 points, while the benchmark Top-40 index fell 0.08 percent to 47,535 points.
Leading the fallers, Exxaro fell 5.06 percent to 101.06 rand, while Royal Bafokeng Platinum was down 4.81 percent to 29.30 rand.
In fixed income, the yield for the benchmark government bond due in 2026 rose 1 basis points to 8.515 percent. (Reporting by Nqobile Dludla; Editing by Richard Lough)