THE DOLLAR is rising steadily on the world's currency markets, and the political response is getting louder. It's generating sharp irritation between this country and its trading partners. Here at home, a rising dollar means increasing pressure for trade protection for the weak industries and export subsidies for the strong. Perhaps you have been wondering why you are suddenly hearing so many more complaints about Japan's trading practices. For your answer, you might keep an eye on that obscure table in the financial pages that reports the daily dollar-yen exchange rate.

But it's not only the yen. The dollar has been climbing against the currencies of all of the major trading nations. It is mainly due to one simple and direct cause: the American interest rates. They had been falling in late summer and early autumn, and the dollar declined with them. Then, around Thanksgiving, interest rates began rising again and, with a month's lag, the dollar began to follow them up. High interest attracts money from abroad, and as foreign investors scramble for dollars, they bid up the dollar's price in pounds, marks, francs and lira as well as yen.

By reducing the prices of imports--for example, oil --the rising dollar has made a major contribution to the sudden drop in the American inflation rate over the past winter. But in the industries that compete with the rest of the world, it also means that American workers must either take lower wages or lose jobs --and perhaps, as in the automobile industry, both.

The American dollar is now significantly overvalued. Because the Reagan administration's excessive budget deficits are the reason for the present interest rates, it is accurate to say that the impasse over the budget is also responsible for forcing the dollar too high. It is another aspect of the urgency in rewriting the budget and getting the deficits under control. Until that happens, the dollar's international value will continue to be swung by huge flows of speculative money chasing the interest rates, rather than being set by the country's basic strength as an industrial producer and trader.