Strengthening of rupee has made Indian rice dearer in the international market. India is likely to export 4.4 million tonnes of rice in 2007, almost the same as a year ago, the United Nation's Food and Agricultural Organisation said in its latest outlook.

Indian rice export prices were expected to increase with the Food Corporation of India setting a higher rate for purchases from farmers and a supply shortage in Basmati rice.

The rupee has strengthened against the dollar to reach a nine-year peak of 40.28 on May 28. The government has recommended a minimum support price of Rs 675 per quintal for grade 'A' paddy and Rs 645 for common varieties during the 2007-08 (July-June) season.

This is an increase of Rs 65 per quintal over the price offered in the 2006-07 procurement season. The report said global Basmati rice prices are likely to rise, reflecting supply shortages of the variety in India and Pakistan.

The prices of traditional Indian Basmati rice are ruling at $1,400 per tonne compared with $700 a year ago. India produced 91.05 mt of rice during the 2006-07 crop year compared with 91.79 mt in the previous year.

The report said strong import demand is expected to drive international trade in rice to a new high of 30.2 mt in 2007, largely spurred by a return of Indonesia as a major rice importer.