A Chinese company requires $US 5 million for one year to finance its working capital needs.  Two borrowing alternatives are available: 

1. Borrow $US 5 million in Eurodollars in London at 4% per annum
2. Borrow Hong Kong dollars $39 million in Hong Kong at 7% per annum and exchange these Hong Kong dollars at the present exchange rate of HK $7.8/US$ for US dollars to provide $US 5 million of financing

Explain under what circumstances you would advise the company to take the U.S. dollar loan rather than the Hong Kong dollar loan.