In an interview with The Standard and its sister publications Sing Tao Daily and Eastweek, Tsang said he informed then-premier Zhu Rongji of the move, which marked a turning point in the Asian financial crisis.

"I was pushed by [then-secretary for financial services] Rafael Hui Si-yan and [former Monetary Authority deputy chief executive] Norman Chan Tak-lam to make a quick decision as interest rates had risen sharply and there was little time to hesitate," said Tsang, who was financial secretary at the time.

"With no loans and adequate fiscal reserves to thwart a market collapse, we decided to go on the defensive. But the question was when and how to retreat from the market and how to deal with the aftermath."

He said: "We briefed the then-chief executive [Tung Chee-hwa] on our proposal for half an hour and received his staunch backing ... I launched the intervention on August 13, 1998. The following day, I phoned then-premier Zhu Rongji, who pledged his full support.

"Fortunately, the battle lasted less than two weeks - shorter than an anticipated two-month battle. As the global speculative activities faded in Russia, we were better equipped with a stronger stake in hand. We then turned to fight the speculators in the New York stock market.

"Many foreign speculators had expected us to fight till the Hang Seng Index had climbed to 10,000 points, but we decided to make a sudden halt at 7,800, which was proposed by [Monetary Authority chief executive] Joseph Yam Chi-kwong and Hui, who insisted such a move would give us good luck as the Hong Kong dollar is pegged to the greenback at HK$7.80."

The public listing of the government's Tracker Fund was a rare opportunity.

"The Tracker Fund turned a crisis into opportunity. It benefited the entire community and cushioned the impact of the government intervention in the stock market. We also introduced a series of financial reforms, like merging the two exchanges and unifying the clearing house system," Tsang said.

Tsang said he was in anguish over the 1998 decision but that he had no choice.

"We only intended to fight the vultures by going back to step one. Norman Chan, Rafael Hui and I are all superstitious about 7.8 as our lucky number, where our US peg-link stays and our index finally hit rock bottom at 7,800.

"The biggest headache was to find a way out of the dire implications for the market as [the intervention] went against principles, as well as [brought about] the political backlash. The Tracker Fund turned the government into the biggest institutional investor in the market and we went for a public launch to resolve the impasse.

"The market intervention has been the most agonizing experience in my 40-year career in public service, but it was short-lived and less traumatic than the greatest challenge to Hong Kong - the devastating SARS outbreak in 2003," Tsang said.

Meanwhile, speaking in Hunan Sunday, Tsang vowed that Hong Kong will continue to peg its currency to the US dollar. He said Hong Kong has proved to the world it has the ability and the resources to maintain the peg.