Hong Kong introduced the currency board system in 1983, amid plummeting confidence in the economy as China and the UK negotiated the future of what was then a British colony. The peg has since helped the territory become a major financial center and trade hub.
Mr Tsang said the peg had also helped Hong Kong weather the currency market turmoil that has hit some countries since the U.S. Federal Reserve started talking about "tapering" its quantitative easing. "Some economies had no choice but to impose capital controls to defend against the volatile fund flows. The Hong Kong dollar, on the contrary, has been stable," he said.
When U.S. Federal Reserve chairman Ben Bernanke raised the prospect in May that the central bank would start reducing its asset purchases, global emerging markets were hit with a wave of selling. India and Indonesia – two countries that run persistent current account deficits and rely on foreign capital for funding – were the worst hit in Asia. Both were forced to introduce measures, including interest rate increases and capital controls, to stem a run on their currencies.
But almost all emerging Asian countries suffered from capital outflows, dramatic equity market falls and significant drops in their exchange rates. Only China, with its strict currency controls, proved immune. Over the course of this year, the renminbi has continued to rise steadily against the U.S. dollar, and hit a fresh 20-year high on Wednesday.
(Read more: Here's one currency that has averted the EM rout)
After suffering the worst fall of any major currency relative to the U.S. dollar, Indonesia has tried to bolster the rupiah by implementing measures to improve currency market liquidity and signing bilateral currency swap arrangements with China, Japan and South Korea. Jakarta also abandoned its policy of using "moral suasion" to control the rate at which banks were selling rupiah – a measure that caused the foreign exchange market to seize up.
Mr Tsang said the Chinese territory's government believed that the currency board was "still the most appropriate monetary system for Hong Kong in light of the challenges ahead", which he said included the fact that the "exit from quantitative easing in major economies may result in volatile fund flows".