Ferguson has been rumoured to be wanted by several clubs already this season, but director of football Barry Fry expects the young manager to stay at London Road.
The latest claims was that Ferguson was wanted by City's new owners, a group of businessmen based in the United Arab Emirates and led by a member of the Abu Dhabi royal family.
That appears nonsense, with Hughes heading to the Middle East to discuss potential targets in the January transfer window.
And Barry Fry, Posh's director of football, was left amused that he was having to dismiss speculation linking Ferguson with the Citizens.
"Neither the club nor Darren have heard anything from Manchester City or any other club and clearly this particular story is just paper talk, at the moment," he told the Peterborough Evening Telegraph.
"Obviously we wouldn't stand in his way if a Premier League team came after him. It hasn't happened yet, but it will in the future. He'll be linked with every job that becomes vacant, not just because he's successful, but because of the way he's achieved that success.
"Darren will be a top-class manager at the highest level. That's a certainty, but I suspect Man City won't be his destination just yet. If they do come in for him the compensation we'd be after would rise seeing as they have super-rich owners!"
Ferguson's dad, Sir Alex, is manager of City's fierce rivals Manchester United