BROWNSVILLE, Texas - Rain has started to fall along the Gulf Coast as hurricane Dolly closes in on towns straddling the Texas-Mexico border.

The storm is packing winds up to 137 kilometres per hour and may strengthen when it hits land later on Wednesday.

The Category 1 hurricane is expected to dump up to 38 centimetres of rain, threatening flooding that could breach levees in the heavily populated Rio Grande valley.

Dolly was upgraded from a tropical storm Tuesday afternoon, and its sustained winds have become stronger.

At 7 a.m. EDT, the storm's centre was about 88 kilometres east of Brownsville, moving northwest at about 13 kilometres per hour.

The National Hurricane Center says Dolly could approach Category 2 strength, meaning wind speeds of at least 155 kilometres per hour, when it reaches the coastline later on Wednesday.

A hurricane warning was in effect for the coast of Texas from Brownsville to Corpus Christi and in Mexico from Rio San Fernando northward.

Texas officials urged residents to move away from the Rio Grande levees because if Dolly continues to follow the same path as 1967's hurricane Beulah, "the levees are not going to hold that much water," said Cameron County Emergency Management Co-ordinator Johnny Cavazos.

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