* Turkish lira drops 3.6 pct, local elections scheduled for Sunday
* S.African rand dips ahead of central bank rate meeting
By Aaron Saldanha
March 28 (Reuters) - Emerging market currencies fell on Thursday, with a battered Turkish lira on track for its second worst day in seven and a half months, while developing world stocks dipped on concerns of slowing global growth.
While MSCI emerging market currencies index dipped 0.2 percent, the lira slid 3.6 percent, moving towards levels seen during Friday's 5.1 percent tumble, which was its worst slide since the middle of August last year.
Bankers said Turkey's central bank raised its total lira swap sale limit to 30 percent for swap transactions that have not matured, in a move aimed at boosting the bank's forex reserves. Repeated attempts to shore up the lira over the past year have left Turkey perilously low on hard cash reserves.
The country is due to hold local elections on Sunday, with authorities trying this week to stabilize the lira by pressuring speculators shorting the currency.
"The response from the administration to the outcome of this crucial vote – seen by many as a referendum on President (Tayyip) Erdogan and his executive powers - will be critical for the lira and local assets," wrote Piotr Matys, an EM FX strategist at Rabobank, in a note.
Yields on 10-year local Turkish bonds rose to 18.5 percent, on course for their highest closing level in about five months. Turkish stocks fell for a fifth straight session, pulled 0.4 percent lower as losses among industrials and energy stocks weighed.
Turkey's banking sector is especially exposed to a softer lira due to significant foreign currency debts. Local lenders' shares have been hit worse than the country's stocks benchmark in this week's sell-off.
MSCI's index of developing world stocks fell 0.2 percent, hurt by weakness among shares in South Korea and index heavyweight China.
The Shanghai Composite equities index slid 0.9 percent, while Chinese blue-chips fell 0.4 percent. Stocks in export reliant South Korea declined 0.8 percent.
Russia's rouble held an even keel, weathering a 0.6 percent decline in prices of oil, a key Russian export.
Lower oil prices weakened local energy stocks, which led to Russian equities dropping 0.2 percent on the whole.
South African stocks rose 0.3 percent, while the rand was 0.4 percent softer ahead of a South African Reserve Bank (SARB) rate meeting, at which borrowing costs are expected to be left unchanged at 6.75 percent.
Investors will be on the lookout for the bank's outlook, at a time when serious concerns regarding electricity utility Eskom have blighted sentiment towards Africa's most industrialized economy.
"Of particular interest is, first, the SARB's assessment of the negative impact of (electricity) blackouts on growth and, second, the extent to which it revises its inflation forecasts upwards," wrote Commerzbank Analyst Elisabeth Andreae, in a note.
The Czech crown softened 0.1 percent against the euro, ahead of a central bank meeting at which analysts polled by Reuters expect interest rates to be left untouched.
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Reporting by Aaron Saldanha in Bengaluru