Cyclone Hola continues to weaken as it moves south between New Caledonia and Vanuatu, having been recently downgraded to a category two.
Vanuatu's meteorological service says the storm, now packing winds of only 110km/h, is moving south at 7km/h.
It is currently 400km west of the Vanuatu island of Erromango, and about 250km northeast of the New Caledonia island of Bélep.
Its current track has it heading towards New Caledonia's Loyalty Islands where, despite its weakening, it still has destructive potential.
There, schools and businesses have been ordered closed and people are being urged to prepare for heavy rain, strong winds, and very rough seas.
The territory's government has declared a level two alert to apply in Ouvea at 4pm (New Zealand time) and in Mare at 7pm.
The head of forecasting for the New Caledonian weather service, Gabrielle Castella said the Loyalty Islands were likely to feel the worst impact later today, overnight and into Saturday.
"According to our forecast we expect very bad weather conditions from this afternoon until Saturday with violent gusts up to 70 knots and very heavy rain.
"Severe gusts and heavy rain are also expected in the south of New Caledonia so the level two of the cyclone alert system has been activated."
Gabrielle Castella said people in the Loyalty islands needed to prepare now for this evening's severe gales and heavy rain as well as storm surges and large sea swells.
Fishing tour operator on Lifou in the Loyalty Island group, Alex Rigourd, said he had been cleaning up loose items around his home, buying food and water and stocking up on candles.
He said it was quite common for water and power to be out for three or four days when the islands are hit by bad weather.
According to him, local people were securing their boats.
"They just make sure that, the owners make sure that they are really safe, in the water. And the others that can take out of the water, the boat out of the water, they just do it, they take out their boat and tie them really tight on the road."
Mr Rigourd said some houses in the loyalty islands could be easily damaged as their corrugated iron roofs were held on with rocks
He explained that during a storm, people tended to go to the strongest houses of extended family members.
Mr Rigourd said the seas had been rough this morning and that he was expecting Cyclone Hola to arrive on Friday or Saturday.
New Caledonia's two domestic airlines cancelled all flights today in anticipation of the cyclone passing the territory, but international flights to New Caledonia were running on schedule for the time being.
Parts of Vanuatu were experienced heavy wind and rain today.
Authorities in Vanuatu say gale force winds are expected to affect the southern Tafea and Shefa provinces tonight and tomorrow, but an all clear has been given to Malampa province.