Morgan Stanley made bets against the euro this week on behalf of a hedge fund client, according to three traders.

A trader with the New York-based bank purchased put contracts in the options market to sell euros in exchange for dollars, these traders said. The contracts grant the right, but not the obligation, to sell roughly $2bn worth of the currency at an exchange rate of $1.10 in three months - a relatively extreme wager that the euro will fall toward parity against the dollar. Morgan Stanley's own analysts see the euro falling to $1.20 by the end of 2012.