What is meant by trading of currency spreads?

Spreads are an interesting way of trading on widening or narrowing of spreads between two months. For example, if you expect that the spreads between the December contract and the November contract will widen due to a Fed meet outcome, then the best way is to trade long on current month and short on the next month. But that would be double the time, cost and transaction management. That is not optimal. Easier still is to directly buy the spread where you expect the spread to widen or sell the spread the spread where you expect it to narrow. The spread contract also acts as a indicator of future movement of futures prices.

In the above if you expect the USDINR DEC-Jan spread to widen from 0.2 to 0.25, then you just buy this spread contract and then you can book the profits when your profit target is reached. It is as simple as that.