A swaplet that constitutes an agreement in which one counterparty makes floating rate payments based on a foreign forward rate and receives from the other counterparty fixed or floating payments based on the domestic interest rates. From the buyer’s perspective, the value of a quanto swaplet is equal to the difference between two rates: the foreign currency-denominated rate received by the swaplet buyer and the domestic currency-denominated rate paid by the buyer.

It is known as a diff swaplet or a differential swaplet.