JPY and Nikkei: correlation history
Normally, if the national stock market rallies, so does the national currency as it enjoys the inflow of funds of investors who want to make money. Japanese yen enjoyed the same positive correlation with Nikkei 225 until the year 2005.
Since 2005, however, yen and the Nikkei have had a strong negative correlation (positive correlation with USD/JPY). This paradox may be explained by the low interest rates in Japan and higher returns abroad. Relatively loose monetary policy of the Bank of Japan caused a decline in Japanese yen (USD/JPY growth). As a result, Japanese exporters have also benefited from the cheap national currency, so the Nikkei index rose.
This relationship held when global financial crisis broke out in 2008. Investors unwound holdings of higher-yield assets and bought back JPY making the rate of Japanese currency go up. As JPY became more expensive, this had a negative impact on the profits of Japanese exporters and, consequently, Nikkei.