Chinese Premier Wen Jiabao told U.S. President Barack Obama on Saturday that China will strengthen the flexibility of the yuan's exchange rate, and that it had already achieved notable success in exchange rate reform, state media reported.

Wen said China was closely observing changes in the yuan's exchange rate and will continue steady reforms, Xinhua news agency cited him as telling Obama on the Indonesian resort island of Bali.

Wen said that from late September to early November, offshore forwards markets showed expectations of a depreciation in the renminbi exchange rate.

He said: This has not been determined by people but is a response of the market to the renminbi exchange rate.

(Reporting by Ben Blanchard; editing by Neil Fullick; Additional reporting by Chris Buckley in Beijing)