* Latam stocks, FX up for 8th straight day

* Brazil inflation speeds past forecasts

* IMF approves Argentina's $45 bln program -sources

* EM debt sees 11 straight weekly outflows - BofA

March 25 (Reuters) - Latin American currencies rallied for an eighth straight day on Friday as investors backed commodity-linked assets, with Brazil's real hovering at two-year highs as surging inflation kept up expectations of aggressive monetary policy tightening.

MSCI's index of Latin American currencies rose 1.2%, while stocks gained 0.8%. Both indexes were set to end the week higher, with the former on track for its best week since June 2020.

Brazil's real led gains, jumping 1.7% to 4.74 per dollar, after monthly inflation data ending in mid-March showed the biggest spike in seven years.

"The stronger-than-expected Brazilian inflation reading for the first half of March, of 10.8% y/y, will be followed by a jump to 11.5-12.0% in the near term as recent fuel price hikes filter through," said William Jackson, chief emerging markets economist at Capital Economics.

"While the central bank has given signals that there may just be one more 100 bps rate hike in the current cycle, the coming rise in inflation will prompt it to tighten a little further."

Brazil's central bank chief Roberto Campos Neto said that ongoing monetary tightening will likely end with benchmark rates at 12.75%. Swiss bank Credit Suisse expects the Selic benchmark interest rate to end the year at 14%.

Latin American currencies are on pace for their longest winning streak since May 2020 as commodity prices have soared on supply concerns after sanctions on Russian over its attack on Ukraine that began on Feb 24.

Crude prices rose more than 1% to over $120 a barrel on Friday after a missile attack on an oil distribution facility in Saudi Arabia.

However, some analysts are skeptical about further gains for the region's currencies due to potential political uncertainties ahead of a general election in Brazil this year, and an aggressive tightening cycle by the U.S. Federal Reserve.

"We forecast that the Brazilian real will fall from ~4.8/$ at present to 5.3/$ by end-2022, and that the Mexican peso will drop from ~20/$ to 21/$," Capital Economics economist James Reilly said in a note.

Mexico's peso continued to hold near its strongest level since late September at 20 per dollar after the central bank on Thursday raised its benchmark interest rate 50 basis points to 6.5%, a decision unexpectedly announced hours ahead of schedule by President Andres Manuel Lopez Obrador.

Meanwhile, sources told Reuters that the International Monetary Fund's executive board approved a $45 billion program for Argentina after more than a year of negotiations, allowing the South American country to avoid a costly default with the Washington-based lender.

Emerging market debt has seen outflows for the past 11 weeks while EM stocks have seen outflows for the past two weeks, Bank of America said in its weekly flow note on Friday.

(Reporting by Anisha Sircar and Sruthi Shankar in Bengaluru; editing by Jonathan Oatis and Richard Chang)