The impact of the real effective exchange rate (REER) on Pakistan's balance of trade (BOT) was studied from 1981 to 2015. The analysis showed a significant positive relationship between BOT and REER in both the short and long run. This means that when the REER is misaligned, it leads to a trade deficit. The study also found that Pakistan should diversify its exports beyond agricultural goods to improve its trade balance. Additionally, there is a connection between REER, terms of trade (TOT) deterioration, and foreign debt, with trade influencing exchange rates.