'Our linkage with the US dollar is the right policy for now and for the foreseeable future, particularly during this period of great financial turmoil,' Mr Tsang told reporters.

He said Hong Kong had benefited from more than 20 years of the peg, which had provided stability to the market.

'If the US dollar sinks, we will sink with it,' he said, when asked about worries the value of the US dollar could collapse with the injection of huge government funds to try and stabilise the financial industry.

'The worst thing to do at this stage is to change the system and (inject a) measure of uncertainty into the market.'

Mr Tsang said he did not believe it was possible for a currency like the Hong Kong dollar to stand alone in a globalised economy.

'With a small currency like this, it is very difficult to defend your long-term economic interests, because it is unable to provide the certainty which we need,' he added. -- AFP