Iranian Foreign Minister Seyed Abbas Araghchi held a telephone conversation with Sri Lanka’s Foreign Minister Vijitha Herath on Friday evening to discuss regional developments and bilateral relations.

During the call, Araghchi briefed the Sri Lankan minister on the latest situation following what Iran described as military aggression by the United States and Israel against the country.

The Iranian foreign minister also expressed appreciation to the Sri Lankan government for its efforts in assisting the crew of the Iranian warship Dena following the March 4 attack.

He thanked Sri Lanka for helping rescue crew members and for facilitating the transfer of the bodies of 84 sailors killed in the incident back to their homeland.

The Governor of the Central Bank of Sri Lanka, Dr. Nandalal Weerasinghe has assured the public that Sri Lanka is now in a “much better position” to withstand global economic shocks, including rising oil prices and geopolitical tensions in the Middle East.

Speaking in an interview with Bloomberg recently, the Governor highlighted that the nation has built significant financial buffers, including foreign reserves that have surged from near-zero levels to over $7 billion. 

This provides a critical safety net against the rising oil prices and supply chain disruptions currently triggered by Middle East tensions.

The Governor emphasized that the domestic inflation environment has transformed, dropping from a crisis peak of 70% to a current rate of 1.6%. 

This low inflation gives the Central Bank “significant space” to absorb external price shocks without destabilizing the local economy. 

Unlike the previous crisis, where fuel shortages were caused by a total lack of foreign exchange, Dr. Weerasinghe clarified that any current risks are related to global supply logistics rather than a lack of domestic funding. 

He noted that the exchange rate will be allowed to act as a shock absorber to manage demand and protect the country’s fiscal health.

Sri Lanka’s official reserve assets increased by 6.6% to USD 7,284 million in February 2026, compared to USD 6,832 million recorded in January 2026.

Accordingly, country’s reserves have surpassed the USD 7 billion threshold for the first time since August 2020. 

However, this includes the proceeds received under the swap arrangement with the People’s Bank of China, according to the Central Bank of Sri Lanka (CBSL).