South Korean shares on Monday ascended on the report of a possible appreciation of the Renminbi (RMB), local analysts said.

The benchmark Korea Composite Stock Price Index (KOSPI) climbed 27.73 points, or 1.62 percent, to finish at 1,739.68.

The main index launched a strong kick off at the opening of the session following the People's Bank of China's announcement on June 19 that it will enhance the RMB exchange rate flexibility.

With the report widely interpreted as a possible rise of the currency, market sentiment was buoyed as local media and analysts forecast it will benefit the overall South Korean economy.

While foreigners continued to make a strong net buy, together with institutions, retail investors continued to stay as net sellers.

Stell shares led the rally, with the market giant POSCO and Hyundai Steel soaring 5.91 percent and 6.80 percent, respectively.

Large cap shares also joined the gain, with Samsung Electronics and Hyundai Motors rising 0.97 percent and 0.69 percent, respectively.

The junior bourse KOSDAQ also made an advance, adding 3.13 points, or 0.63 percent, to close at 498.36.

The derivatives ended higher with the KOSPI 200 Futures market gaining 3.92 points, or 1.75 percent, to 228.25.

Meanwhile, the local currency gained strength against the U.S. dollar on the RMB rise report, recouping 30.60 won to end trading at 1,172.0 won.

Bond prices closed lower, with the yield on three-year Treasury notes adding 0.16 percentage point to 3.88 percent.