Their interests rates are not high because the borrowers are stupid. They are high because they have a lot of inflation, so the 1 billion simoleons you borrow today is worth a lot more than the 1 billion you pay back in 1 year. For the lender to break even, you must also pay for the inflation on top of default risk. This is actually the case everywhere, but in developed countries the inflation rate is so low that for everyday borrowing the effect is negligible.
In your example, the exchange rate will rapidly fall (because the simoleons are losing value faster than the dollar) and you will "unexpectedly" lose money. Moreover, there may be special laws governing currency exchange, such as taxes or capital controls, that will interfere with your business. Not to mention having to account for higher levels of crime and corruption. All of these problems drive up costs, which is why the interest must be higher to support a positive profit margin.
However, you don't need to do any forex shuffling if you want to lend in foreign countries. You can often buy their bonds directly through your broker without having to do any currency exchange. Or, you can buy funds that hold the bonds for you. The rates are higher, but the risks are also higher - it is actually not unheard of for developing countries to not meet their financial obligations. Generally the market is also weaker and more unpredictable.