ISTANBUL?The Turkish central bank Thursday raised interest rates for the first time in nearly three years by more than expected, after the local currency slumped to record lows against the dollar amid the country's political upheaval.

The Monetary Policy Committee in Ankara said it raised its benchmark one-week repo rate to 8% from 7.5%?the first increase since January 2014. The central bank raised the overnight lending rate to 8.5% from 8.25% and held its overnight borrowing rate at 7.25%.

Ten out of 15 economists surveyed by The Wall Street Journal forecast that the benchmark one-week repo rate would be raised to 7.75%, while five had expected rates to be left on hold. All forecasters surveyed predicted the overnight lending and overnight borrowing rates wouldn't change.

Turkey's lira has weakened significantly since the summer's failed coup attempt. It has also slumped 8% against the dollar since the U.S. elections, in line with a broader selloff in emerging-market currencies. The plunge was also driven by domestic political uncertainty and expectations of a rate increase from the U.S. Federal Reserve in December.

After the decision was announced, Turkey's lira gained 0.6% to 3.37 against the dollar. The main BIST 100 stock index was up 0.8% while the benchmark two-year government bond yield was steady at 10.95%.

Write to Yeliz Candemir at yeliz.candemir@wsj.com

(END) Dow Jones Newswires

November 24, 2016 07:25 ET (12:25 GMT)

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