The England Under-21 star has almost three years left on his City contract, but was recently linked with a move to Serie A, which has now been denied by Royle.
The former Everton manager believes that the speculation is the talk of agents, who he believes are trying to earn money by moving the 21-year-old elsewhere.
"I had the story that Nicky was being tracked by Fiorentina and Napoli and it made me smile," said Royle. "As far as I am concerned he is not going anywhere.
"Everyone knows how highly I rate our goalkeeper and this latest piece of gossip has all the hallmarks of a mischievous agent. It is absolute fiction.
"Nick has around three years of his current deal left and I expect him to fulfil it at the very least.
"We have already spoken to him about a new contract but, unfortunately in the modern game, agents don't make money unless their players move around."
