* Rates slide for second day on strong cash injection
* Traders increasingly skeptical c.bank will cut RRR this month
* Banks preparing for end-of-month cash demand
By Pete Sweeney
SHANGHAI, July 25 (Reuters) - China's short-term money rates eased for a second consecutive day on Wednesday as liquidity remained ample following a bigger-than-expected cash injection the previous day.
The People's Bank of China injected 95 billion yuan ($14.88 billion) through 7-day reverse repos on Tuesday, more than the 20 billion worth of reverse repos that matured on the same day, resulting in a net injection of 75 billion yuan.
The benchmark seven-day weighted average bond repurchase rate dropped nearly 6 basis points to 3.3376 percent at midday from Tuesday's close of 3.3943 percent, after sinking by nearly 19 basis points on Tuesday.
The overnight repo rate plunged over 27 bps to 2.6916 percent by midday from 2.9698 percent at Tuesday's close.
Longer-term rates also declined. The 14-day repo rate dropped by over 13 bps at midday, and the 21-day repo rate declined to 3.9084 from 4.1291 percent at the end of Tuesday.
However, a trader at a Shanghai bank said that monetary conditions could come under pressure again soon, adding that expectations that the PBOC will cut the reserve requirement ratio (RRR) for Chinese banks this month are waning.
"We are watching for tomorrow's reverse repos," he said.
Another 80 billion yuan worth of reverse bond repurchase agreements are set to mature on Thursday, effecting a liquidity drain.
At the same time, banks are conserving cash to meet month-end reserve and loan ratio requirements.
Nevertheless, many traders expect the PBOC to announce another cut in banks' reserve requirement ratios in the near future to supply Chinese banks, which have stepped up lending in response to a government appeal to help stabilise slowing economic growth.
China's economy has slowed sharply this year, posting GDP growth of 7.6 percent in the second quarter, its slowest expansion in more than three years.
The PBOC has already cut banks' RRR twice this year, in February and May, and reduced official interest rates twice - in June and July.
Other factors are also putting pressure on money markets.
China's five biggest lenders distributed a combined 209.1 billion yuan ($32.81 billion) in dividends to shareholders.
Chinese firms have also begun paying income taxes on their first-half earnings, intensifying demand for cash.
Current Prev close Change
(pct) (bps) 7-day repo 3.3376 3.3943 -5.67 7-day SHIBOR 3.3375 3.3717 -3.42 Note: Repo rate is weighted average. ($1 = 6.3864 Chinese yuan) (Additional reporting by Ding Shuqin; Editing by Sanjeev Miglani)