Rumour-driven buying enlivened usually dull trading in the Hong Kong dollar yesterday, as the forex market was abuzz with gossip as to whether the local unit has become George Soros' next speculation target. The Hong Kong dollar exchange rate against the US dollar showed unusual volatility after 4pm when the London market opened. It weakened notably from $7.7345-55 to 7.7380-85 within hours of London opening. The highest intra-day level was $7.7395, a fairly large margin from the day's opening of $7.7350. 'It was an unsubstantiated reaction to old news published by the financial media,' said Andrew Fung, head of capital markets at the Commonwealth Bank of Australia. Britain's Sunday Business newspaper reported: 'Insiders believe that George Soros, the world's most feared currency speculator, has already sold Hong Kong dollar short to the tune of US$2 billion and may be ready to risk more.' It also stated that fund management house Regent Pacific Group had pulled US$1 billion out of Hong Kong 'in anticipation of any attack from the likes of Soros'. While the news caused hardly any ripples in Hong Kong on Monday and yesterday morning, London dealers reacted differently. Dealers in Hong Kong said there were no signs of any impending speculative attack on the local currency when the story was carried on wire services. Standard Chartered Bank treasurer Stanley Wong said the Hong Kong dollar futures market 'hardly budged'. Speculators typically sell short on Hong Kong dollars and buy long-term dollar futures to finance the purchase of US dollars. 'However, the six-month Hong Kong dollar futures did not show any unusually high premium that would be commonly associated with a speculative attack,' Mr Wong said. The movement of the Hong Kong dollar in the last few months did not indicate that US$2 billion had been poured in to the market. The only time it showed any significant movement was in early June. 'But we know which corporate did that. It was a commercial deal,' Mr Wong said. He said yesterday afternoon's buying could be the result of opportunistic corporate treasurers buying the US dollar which was strengthened slightly because of the rumour. The Hong Kong Monetary Authority took no action yesterday. 'The buying came too late for the authority to react,' Mr Wong said. Market practitioners considered the buying interest temporary. 'It is unlikely that Soros would raid this market because the risk and return do not justify such a move,' Mr Fung said. 'The market is too small and the speculators are easily penalised.'