South Korean stocks closed higher on Friday, with the local currency also strengthening against the US dollar, as investor enthusiasm was fueled by expectations of large-scale shareholder return programs from the nation's two semiconductor giants.

The benchmark Korea Composite Stock Price Index (KOSPI) advanced 60.37 points, or 0.88%, to settle at 6912.95, after touching an intraday high of 6954.12.

"The shareholder return initiatives from SK Hynix and Samsung Electronics have propped up the domestic market, overshadowing external headwinds," noted Lee Kyung-min, an analyst at Daishin Securities.

SK Hynix unveiled its buyback plan on Wednesday, committing to repurchase roughly 40 trillion won (equivalent to $28.8 billion) in common shares. Meanwhile, market heavyweight Samsung Electronics is also anticipated to announce a shareholder return scheme worth up to 110 trillion won later in the day.

However, lingering external uncertainties kept a lid on further upside for the market. Despite an unexpected bond repurchase operation by the US Treasury, the move failed to allay persistent concerns over inflation and government debt levels, which instead pushed bond yields higher.