Finance ministers from Japan and China have been discussing emergency financial measures to try to protect the region from a looming U.S. recession. Naomi Martig reports from Hong Kong.

Japanese Finance Minister Fukushiro Nukaga (l) and his Chinese counterpart Xie Xuren shake hands before their meeting in Tokyo, 23 Mar 2008 (photo released by Xinhua News Agency

During meetings Sunday in Tokyo, finance ministers of Japan and China agreed to cooperate in easing any repercussions in Asia from a U.S. mortgage crisis that continues to drag down the U.S. economy.

The two officials said they would honor a regional cooperation agreement known as the Chiang Mai Initiative, which allows participating governments in the Asian region to lend foreign currencies in the event of a financial emergency.

Japanese Finance Minister Fukushiro Nukaga spoke to reporters following the meeting.

Nukaga said it was important for Japan, China and India to lead the global economy at this time of increasing uncertainty.

Market fluctuation in Asia has been intense in the last couple weeks following increased concerns that the United States is in the beginning stages of a recession.

Mitsuhiro Fukao is President of the Japan Center for Economic Research. He says countries like China and Japan, and areas like Taiwan, do not have to worry too much about the fallout from the U.S. subprime mortgage crisis, because they can financially sustain themselves if their exports to the U.S. decline.

"But some Asian countries may be facing a shortfall of exports to the U.S. if the U.S. economy stagnates or falls into recession, then some Asia countries may run short on foreign currency reserves," said Fukao.

Fukao says countries such as the Philippines and Indonesia, for example, are likely to face difficulty if there is a lengthy U.S. recession.

And as the dollar continues to dangle below the 100-yen mark, Fukao says that officials have their eyes on just how low it will go.

"If Yen say goes to 90 per dollar, the ministry of finance may intervene to stop rapid appreciation. But at the current level of around 100 yen per dollar the intervention by the government is unlikely."

Analysts say other countries in Asia that rely heavily on trade with the U.S. are likely to try to beef up their domestic financial policies in the face of a U.S. recession and higher inflation rates in China.

The U.S. Federal Reserve has already announced emergency measures to ward off a recession, and further interest rate cuts may be made.

In limited trading Monday, China's main Shanghai Index, plummeted 4.5 percent, while Japan's Nikkei Index closed flat following sharp declines last week. Most Asian markets were closed for holiday.