IN RESPONSE to the July figures for the trade deficit, the dollar's exchange rate is threatened again with another lurch downward. Devaluing the dollar is a bad way to try to cure the trade deficit. A falling exchange rate is already imposing heavy costs on the American economy. One of them is higher inflation. Another is higher interest rates. Together they can, in time, bring exports and imports into balance. But, left to themselves, they will do it through a long and grinding recession. That raises two questions for the Reagan administration: How far is it prepared to let the dollar sink, and what other ideas does it have?

An American trade deficit throws dollars into the foreign exchange markets, and if no one is eager to buy them, the law of supply and demand takes over and the price falls. Through the first half of this decade a lot of foreign investors were eager to buy dollars, and they bid the exchange rate up. But about a year and a half ago, these investors apparently decided that they were holding enough dollars and began to back off. Increasingly, the flood of dollars has been mopped up by foreign governments that are desperate to protect their own exports and employment. In the first five months of this year a dozen governments spent $78 billion buying dollars. As you would expect, Japan, Taiwan, West Germany and Britain were the leaders. Even with governments' intervention on that gigantic scale, the dollar fell and their currencies rose. They aren't going to keep that up indefinitely.

Americans have been startled and disappointed that the substantial fall of the dollar's exchange rate over the past two years has not had more impact on the trade deficit. If the trade deficit is left solely to the exchange rates, the dollar will have to go much lower to bring it into balance -- low enough to jeopardize not only this country's prosperity but the world's.

There are a couple of things that the United States needs to do to take some of the pressure off the exchange rates. One is to get the federal budget deficit down. That will slow the economy a little, reducing demand for -- especially -- those increasingly expensive imports.

Another is to start paying serious attention to oil imports. After six years of good behavior, they started to rise rapidly again early last year. For a time the consequences were offset by falling prices. But this year both the volumes and prices of imported oil are up. Oil has been a major contributor to the widening of the trade deficit over the summer, and the deficit is another good reason to get to work again on energy conservation. In oil, as in trade generally, the United States has let itself become a country that consumes too much, lives beyond its means and doesn't seem to care much where the world's most powerful economy is heading