Last week, Stephen Jen, London-based chief currency economist at investment bank Morgan Stanley, advised clients to 'look to put on positive US dollar/Hong Kong dollar carry trades where appropriate'. In other words, they should sell Hong Kong dollars against the US currency.

At the same time, currency strategists at Barclays Capital recommended buying the US dollar against its Hong Kong counterpart, either outright through the forward foreign exchange market or by using a variety of options strategies.

In the past, when investment bank analysts advised selling the Hong Kong dollar, it was usually because they believed the currency was fundamentally overvalued and that our exchange rate link to the US dollar had become economically unsustainable.

In 1998, similar reasoning led to an all-out speculative assault against the peg, which was defeated only by heavy government intervention through the foreign exchange and stock markets.

This time around, no one thinks the peg is in jeopardy; far from it. In his strategy note last week, Mr Jen said 'there is zero interest on the part of the Hong Kong Monetary Authority in deviating from its linked exchange rate system'. Equally, Barclays' analysts asserted they saw no reason for the HKMA to change its policy over the next year. Instead of dashing speculators' hopes, that confidence opens up a trading opportunity.

Hong Kong's interest rates are now at a substantial discount to comparable US interest rates. In financial theory, that would imply the market expects the Hong Kong dollar to appreciate against the US currency.

However, because of the currency peg, analysts are satisfied our exchange rate will continue to be within its permitted band of HK$7.75 to HK$7.85 for the foreseeable future. That stability allows speculators to pick up easy money by borrowing Hong Kong dollars, selling them for US dollars, and pocketing the interest rate differential without worrying about foreign exchange risk.

To many, this is old news. Hong Kong dollar interest rates have been below US dollar rates since the beginning of last year. For much of that time, a lingering fear that Hong Kong would ditch the link to the US dollar and repeg its currency to an appreciating Chinese yuan discouraged speculative short positions.

In January, however, the yuan passed parity with the Hong Kong dollar without causing so much as a ripple of concern for the peg. Interest has since picked up in shorting the Hong Kong dollar as an interest-rate play. As a result, local interbank interest rates have risen about 0.2 percentage point.

Short-term Hong Kong dollar interest rates are still more than a full percentage point below equivalent US dollar rates, which is enough of a difference to attract speculative attention.

The potential returns from shorting the Hong Kong dollar are unlikely to make anyone rich. Barclays' strategists calculate a maximum payout of just 1.39 per cent from a one-year short Hong Kong dollar position in the forward market. That could be bumped up significantly by speculators with access to leverage. Even so, it is not going to fund anyone's retirement.

The trade could become a touch more attractive over the coming weeks.

With about US$5.7 billion worth of initial public offerings scheduled, capital inflows could push the Hong Kong dollar up and local interest rates down slightly, increasing the possible returns.

So, over the next two weeks, if you hear of speculators selling the Hong Kong dollar short, do not worry. We are not under attack again. If anything, their strategy is a testament to the market's belief in the stability of our exchange rate regime.

The potential returns from shorting the HK dollar are unlikely to enrich anyone