JOHANNESBURG (AFP) - South African traders on Tuesday dismissed fears of a "Mandela crash" when the icon dies, after steep selloffs hit the rand and Africa's largest stock exchange.

The 94-year-old critically ill statesman has not been involved in politics for more than a decade.

But that has not stopped some drawing a line between his hospitalisation and recent market weakness.

As Mr Mandela's condition worsened on Monday, local news outlets screamed headlines like "Rand hit by Mandela health fears".

The Johannesburg Stock Exchange is down around 9 per cent this month and the rand has lost 1.6 per cent against the dollar since Mr Mandela was hospitalised on June 8.

But traders said suggestions that any link to Mr Mandela's death was overblown.

Mr Adriaan du Toit, a strategist at Citi, said any Mandela-fuelled sell-off was "not fundamentally supported", because of his "negligible" impact on policy.

Mr Mandela remains a moral beacon which all South African leaders are now compared to, but even during his 1994 to 1999 presidency he was more occupied with reconciliation than economic policy.

That has not stopped speculation that investors are concerned about political risk and even potential unrest when Mandela dies.

"A lot of the rhetoric around a risk to the rand and the South African economy due to Madiba's illness is largely unfounded," said Mr Mohammed Nalla of Nedbank Capital.

Mr Nalla said weakness in South African markets had more to do with global events: The US Federal Reserve scaling back asset purchases and weak South African economic data.

The Fed's announcement that it will reel in trillions of dollars doled out to stimulate the US economy has sucked the life out of many emerging markets.

With the Fed retreating from the market, many investors have shifted cash from places like South Africa to the relative safe havens of US stocks, bonds and the dollar.

Some suggested that investors may be simply trying to pre-empt any eventual sell-off, but others pointed to a long trend of weakness in the South African economy.

Africa's wealthiest economy grew by just 0.9 per cent in the first quarter.

Unemployment of around 25 per cent, violent mining strikes, a widening budget deficit and painfully high inflation have all taken a toll on sentiment.

The rand's fall in particular appears to fit a longer trend.

In the year to date the rand has lost 17 per cent of its value against the dollar.

Many expect it fall further, whether Mr Mandela dies or not.

Elections are scheduled for 2014 and key plan to remake the economy is likely to be put on the back-burner.

Investors have pined their hopes on the National Development Plan, but it remains unpopular with the ANC's trade union allies.

And more turmoil is expected in the mining sector.

Up to 121,500 jobs and 60 percent of the country's platinum output could be at risk in the mining sector, economists at Nomura bank recently predicted.