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UPDATE 1-Obama prods China's Wen on currency - U.S. official

* Obama presses yuan as “most important issue”

* President asks China’s Wen to do more on currency

* Wen quoted as saying exchange rate reform to continue (Adds quotes from U.S. official)

NEW YORK, Sept 23 (Reuters) - U.S. President Barack Obama said in a meeting on Thursday with Chinese Premier Wen Jiabao that China needed to do more to resolve a dispute over the value of the Chinese currency, a senior U.S. official said.

Obama told Wen in their talks on the sidelines of the U.N. General Assembly that the currency was the “most important issue” of their meeting, the official said.

“The president talked about the importance of our trading relation in general and the currency issue specifically to the United States and the world economy,” Jeffrey Bader, the senior National Security Council official for Asia, told reporters.

Calling the yuan, or renminbi, “the most important issue we’re going to talk about today,” Obama called on Wen’s China to “do more than it has done to date,” Bader added.

Wen told Obama that China would press ahead with reforming exchange rate rules for the yuan, Bader said.

“Premier Wen did reiterate the Chinese intention to ... continue with reform of their exchange rate mechanism.”

China’s central bank said in June it would loosen a peg against the dollar and let the yuan fluctuate more freely. Since then it has risen 1.8 percent against the dollar.

The slow appreciation of the yuan makes it an easy target for U.S. politicians eager to address high unemployment in an election year.

The talks between Obama and Wen came as U.S. lawmakers appeared to move closer than ever to acting on long-standing threats to pass legislation that would penalize China for keeping its currency artificially low.

Critics inside and outside Congress say China deliberately undervalues its currency by as much as 25 percent to 40 percent to give Chinese companies an unfair trade advantage, hurting U.S. exports and employment.

In a speech on Wednesday night, Wen rejected any link between the level of the Chinese yuan and a U.S. trade deficit with China that annually exceeds $200 billion. (Reporting by Steve Holland; Editing by Doina Chiacu and Jerry Norton)