The device exploded just after 8.30pm on Tuesday as police were patrolling the area of Townsend Street, the Police Service of Northern Ireland said.
Police have said the explosion was an attempt to kill police officers.
Superintendent Gordon McCalmont said: “At this time our assessment is that a device exploded while police were on patrol in the area of Townsend Street shortly after 8.30pm.
“The investigation is at an early stage and we have had to ask some residents to leave their homes while we carry out our enquiries. While we are unable to go into specifics of the incident at this stage, I am confident in saying that we are incredibly lucky that the lives of officers and other members of the community were not lost last night.
“We appreciate the understanding and patience of local residents while we carry out our enquiries and would appeal for anyone with information about suspicious activity in the area to contact us.”
Police can be contacted on 101 or information can be passed anonymously through the independent charity Crimestoppers on 0800 555 111.
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