As the yen slipped on Friday to a record 4-1/2-year low against the U.S. dollar, the Dow and the S&P 500 closed at record highs.

The Dow rose 35.87 points to close at 15,118.49 after flitting between gains and losses most of the day:

Yen Gets Crushed, U.S. Dollar Soars

Dow (5-year)

The S&P closed up 7.03 points at 1,633.70, an increase of 0.4 percent. The gains in the stock market were broad. Nine of the ten industry groups in the S&P 500 index were higher:

Yen Gets Crushed, U.S. Dollar Soars

S&P (5-year)

The Nasdaq composite index was up 27.41 points, or 0.8 percent, to close at 3,436.58:

Yen Gets Crushed, U.S. Dollar Soars

Nasdaq (5-year)

But the real action was in currencies.

The U.S. dollar soared above ¥100 for the first time in more than four years, driven by Japan’s aggressive credit-easing policies aimed at reviving the world’s third-largest economy:

Yen Gets Crushed, U.S. Dollar Soars

USD vs. JPY (over a 5-year period)

The U.S. dollar peaking at ¥101.30, the first time since April 2009 that the greenback has traded above ¥100, helped lift Japanese stocks to their highest level in more than five years.

The central bank’s monetary easing, and expectations it will help reverse persistent deflation, have helped drive the value of the yen down by more than 20 percent against the dollar since October, when it was trading at around ¥78.

And although the country’s policies have been approved by most of the world’s leading economies, Japanese officials have had to combat accusations that Tokyo may be manipulating its currency to give its exporters a boost.

In fact, as mentioned before on TheBlaze, Japan’s monetary policies are mostly responsible for talk of an impending “currency war.”

A weaker yen helps Japan’s key exporters by boosting overseas earnings when repatriated and by making goods produced within Japan for export more affordable in markets abroad.

However, it raises costs in yen terms of the imported crude oil and natural gas that resource-scarce Japan must rely on to keep its industries humming and power its cities. This means that competitors may have to manipulate ​their ​currencies in order to keep pace. The result? A currency war.

Japan’s long robust trade surpluses have turned to deficits in the past two years, after demand for imports of oil and gas rose due to the closure of nuclear power plants following the March 2011 tsunami.

The current account balance, which includes financial flows, has remained positive. However the current account surplus fell to 4.3 trillion yen ($43 billion), its lowest level ever, in the fiscal year that ended March 31, down 43.6 percent from a year earlier, according to data released Friday.

The central bank, under its new governor Haruhiko Kuroda, has vowed to double the monetary base through purchases of government bonds to meet a 2 percent inflation target within the next two years.

U.S. markets were mostly mixed today:

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Yen Gets Crushed, U.S. Dollar Soars Yen Gets Crushed, U.S. Dollar Soars

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The Associated Press contributed to this report.