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The exchange rate (ER) instability is an important factor in determining the trade-balance (Tb) of a country. Fluctuations in ER do affect the confidence level of shareholders, traders, and investors (stockbrokers and individual buyers) in the economy; if their confidence is shattered, then it will ultimately slow the trade process. The effect of ER instability on the Tb has been analyzed in this study that implies the impact of J-curve in Pakistan during the time of the 9/11 issue. This study is entirely quantitative considering the basic time-series of data consisting of the following variables; ER volatility, growth instability, export instability, agriculture and manufacturing instability, and trade instability. The instability values of imports, exports, ER, Tb, agriculture, and manufacturing variables have been calculated by using the variance obtained from generalized autoregressive conditional heteroscedasticity (GARCH). It has been found that for a short period, the impact of ER instability on exports is significantly positive with the coefficient of 0.2, but the negative impact of ER instability on imports is -0.2, respectively. Moreover, the relationship between the ER and terms of trade is significant, with a slightly negative coefficient of -0.13. Importantly, this study concludes that the J-curve effect does not work effectively due to different geostrategic problems in a region.