Eleven people were killed and 36 wounded in a bomb attack targeting a police bus in central Istanbul in the morning hours of June 7, Istanbul’s governor Vahip Sahin said. 

The blast creates more security risks in the country which is already on a high alert after several deadly attacks in Istanbul and Ankara earlier this year blamed on Islamic State and Kurdish militants. It seems, however, investors have already priced in the high security risks as the effect of the Istanbul’s blast on the markets was limited. The lira that was trading at 2.9040 per dollar before the explosion, gained value to trade at 2.8993 at 11:20 local time. Stocks rose 0.88%. 

“Note the bomb attack earlier today in Istanbul - the only solace (if any) therein which could perhaps be taken from a market/economy perspective is that it seems to bear the hallmarks of a PKK attack (typically the avoid attacks on tourists, targeting the military and state institutions), rather than an ISIS style attack on tourists, the latter of which is currently Turkey's key achilles heel, and could be a game changer for the credit story,” Tim Ash at Nomura commented.

No group has claimed responsibility for the attack. Previously, the Kurdistan Freedom Hawks (TAK), an offshoot of the Kurdistan Workers’ Party (PKK) carried out car bomb attacks in Ankara earlier this year, targeting a bus carrying military personnel and a police bus, killing more than 60 people. In a previous statement TAK had threatened that it would target Turkey’s tourism industry and warned tourists against visiting the country. In Bursa, a female TAK militant blew herself up on April 28, near a mosque, one of the city’s main tourist attractions. Twenty-three people were wounded in the attack. The PKK distances itself from TAK and denies any link to the radical group. Violence in the country’s southeast has escalated since the collapse of a two-year ceasefire between the state and the PKK last summer.

Turkey is also facing security threats from Islamic State militants that carried out suicide bomb attacks in Istanbul in March. Terror attacks have hit Turkey’s tourism industry the hardest, keeping foreign tourists away from the country, depriving Turkey of much-needed hard currency to finance its current account deficit. The number of foreign tourists visiting Turkey plunged by 28.1% y/y to 1.75mn in April marking the sharpest decline since 1999.

The Tourism Investors Association (TYD) recently warned that the struggling tourism industry could see revenue drop by as much as $15bn this year. Tourism revenues were down 8.3% to $31.5bn last year, and according to the latest data available revenues plunged by 16% y/y to $4.07bn in the first quarter of 2016. The government’s tourism revenue target for 2016 is $27bn.