Tables with FK's of each other I'm working on a database that stores address information. (Related to this question I posted)

I have 2 tables:

CREATE TABLE [dbo].[Country] (
[Code]          CHAR (2)     NOT NULL,
[Code3]         CHAR (3)     NOT NULL,
[CodeNumeric]   CHAR (3)     NOT NULL,
[Name]          VARCHAR (50) NOT NULL,
[ContinentCode] CHAR (2)     NOT NULL,
[CurrencyCode]  CHAR (3)     NOT NULL,
PRIMARY KEY CLUSTERED ([Code] ASC),
CONSTRAINT [CountryContinentFK] FOREIGN KEY ([ContinentCode]) REFERENCES [dbo].[Continent] ([Code]),
CONSTRAINT [CountryCurrencyFK] FOREIGN KEY ([CurrencyCode]) REFERENCES [dbo].[Currency] ([Code])
);


and

CREATE TABLE [dbo].[City] (
[Id]          INT           IDENTITY (1, 1) NOT NULL,
[Code]        VARCHAR (10)  NOT NULL,
[Name]        NVARCHAR (50) NOT NULL,
[CountryCode] CHAR (2)      NOT NULL,
PRIMARY KEY CLUSTERED ([Id] ASC),
CONSTRAINT [CityCountryFK] FOREIGN KEY ([CountryCode]) REFERENCES [dbo].[Country] ([Code])
);


Now I want to add a Capital to my Country table using a FK from the City table. I know that this is impossible because of the constraints (there has to be a City with the Capital's Id, but there also has to be a Country with the Country's Code for the City...if this makes any sense). 

Approach 1:
I'm using this database together with C# and was thinking to write method that would first add a Country with a Capital that is nullable, then add the City to its table and update the Countries Capital with the City that was added.

Approach 2:
Another approach I consider is not adding Capital to the Country table but instead creating a new table CountryCapital and link both the Country and the City (Capital) together.

Which one of these 2 is the better approach? What I think is that approach 1 is a good solution if the database is maintained through C# but would be hard to keep up with if data is added manually. Approach 2 on the other hand looks easier to maintain if manual edits have to be made (add a City, add a Country and add a record in the CountryCapital table with the City's Id and the Country's Code).
For just the country/capital relationship I would go with option 1 and allow the capital to be NULL for a country record, rather than introducing an extra table. In both cases you are allowing the capital to be undefined at any given time so there is nothing to chose between the options from the completeness and referential integrity points of view.

If you do go for option 2, if the country column is not your PK make sure it is set to be UNIQUE otherwise you could accidentally end up with two capitals. With an extra "relationship type" column you could offer extra flexibility with this table though, by allowing things like "second city" and "religious capital" (some countries have this separate from their political capital for various reasons) to be defined.