That should be able to handle reasonably high graphics settings. That being said, the game does have some serious quarks in the graphics engine department. I would suggest trying to lower some of your setting in the separate settings utility - it should be in the same folder, FINAL FANTASY XIV CONFIG. My suggestion would be to drop them all to minimum settings first. That guarantees that graphical lag is not going to be a problem. If you are still seeing lag, it's a network issue or there's something wrong with your computer/installation. In this case, I would suggest either contacting your network provider or re-installing the game.
If, however, in the much more likely instance that this completely clears up your lag, just keep bumping up the settings until you find a nice medium that you don't get lag but still have serviceable graphics.