Iceland's Blue Lagoon. Credit: Getty

By Cristina Velocci

Special to amNewYork

When Iceland’s three main banks failed in October, it sent the country’s currency, the Icelandic krona, into a spectacular freefall, in which it lost nearly half its value. Once considered prohibitively expensive, the four-star hotels, flashy nightclubs and world class restaurants in the capital city Reykjavik are now half-off. Just a five-hour flight from New York, taking advantage of the Reykjavik has never been easier—or more affordable.WHAT TO DO

Golden Circle

Billed as one of Iceland’s must-sees, this 190-mile circular route encompasses a triad of natural wonders, including Ã?ingvellir National Park, a UNESCO World Heritage site where the Vikings first established parliament in 930.

Walk through the craggy Almannagjá fissure, the deep rift where two tectonic plates are tangibly splitting apart, before continuing on to the geother¬mal Geysir, the progenitor to all other geysers. Cap the tour off at Gullfoss waterfall where the white water cascades over two-tiers before taking a dramatic drop into the Hvita River.

Eldhestar

810 Hveragerði, 011-354-480-4800, eldhestar.is

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The small Icelandic horses are not only the same pure breed the Vikings had a thousand years ago, they’re also the only kind in the world to have five gaits instead of four—the fifth being the tölt, a smooth mix between a trot and a gallop that shows off the horse’s muscular, industrial strength.

Head to Eldhestar, an eco-friendly horse farm 30 minutes outside the city where an exhilarating ride takes you through meadows and over lava fields.

Blue Lagoon

240 Grindavík, 011-354-420-8800, www.bluelagoon.com

This infamous geothermal spa on the Reykjanes Peninsula was acciden¬tally created from the salt-water effluence of a nearby power plant.

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The milky blue water is not only steaming hot but also mineral-rich — it’s said to have therapeutic properties that combat psoriasis, jet lag and hangovers. Smear thick white silica mud on your face and body to slough off all the dead skin.

WHERE TO STAY

Hotel Borg

Posthusstraeti 11, 011-354-551-1440, en.hotelborg.is

When it was built in 1930, the 56-room Hotel Borg was Iceland’s first luxury hotel. It retains its original luster thanks to a recent renovation that carefully restored its Art Deco interiors while upgrading with such modern touches as Bang & Olufsen phones, flat-screen satellite TVs, heated towel racks and fluffy down comforters. Rates range mostly between $140-$225.

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WHERE TO DINE AND DRINK

Seafood Cellar

Adalstraeti 2, 011-354-511-1212, sjavarkjallarinn.is

Widely regarded as the finest in town, this restaurant, set amid the stone walls of the oldest cellar in Reykjavík, features unusual presentations of innovative French and Thai-influenced cuisine. The signature dish of tender langoustine in foie gras sauce and black truffles is served in a Mason jar.

Bæjarins Beztu Pylsur

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Posthusstraeti 101

This small waterfront shack has been serving hot dogs since 1935. Saying the magic words eina mid öllu — meaning ‘give me one with everything’ gets you the works: a snappy pup over a bed of crispy fried onions layered with ketchup, sweet mustard and rémoulade sauce. Or simply order a “Clinton,” which comes the way President Bill had it on his visit here— with just mustard.

Kaffibarinn

Bergstadastraeti 1, 011-354-551-1588, kaffibarinn.is

Whether it’s the London Underground sign above or the clamor of unruly patrons that’s more conspicuous is hard to say, but this bohemian dive part-owned by Blur frontman Damon Albarn packs in artists, musicians (locals Bjork and Sigur Ros are known to stop by) and hipsters on a regular basis.

KNOW BEFORE YOU GO

Currency: As of press time, $1 U.S. dollar = 114 Icelandic krona.

Room service: Re¬gardless of where you choose to crash, make sure to request a room facing inward to avoid being kept up all night by the raucous revelers filling the streets until 5 a.m.

Tickets: Icelandair is currently offering a Budget Getaway package for travel through April that includes roundtrip airfare, two nights’ hotel, roundtrip airport and hotel transfers and Scandinavian breakfast each morning for $799 per person. Flights from New York start at $499.