New Jersey USA an enigma for island capital (3,4)

I believe the answer is:

san juan

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'capital' is the definition.
(I have seen 'Hispanic capital' mean 'san juan' so perhaps 'capital' could also mean 'san juan')

I cannot understand how the rest of the clue works.

Can you help me to learn more?

(Other definitions for san juan that I've seen before include "Hispanic capital" , "Capital of Puerto Rico" .)

I've seen this clue in the Sydney Morning Herald.

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