ReykjavÃk is the capital and largest city of Iceland. It is located in southwestern Iceland, on the southern shore of Faxaflói bay. Its latitude is 64°08` N, making it the world`s northernmost capital of a sovereign state. With a population of around 131,136 and 233,034 in the Capital Region, it is the centre of Iceland`s cultural, economic, and governmental activity, and is a popular tourist destination.