“Mustafi? We hope it will be done,” the Frenchman said.
“He is one of a number of players we are looking at.
“We are struggling to find the players we need, but we must be responsible.
“Mustafi is one of a number of players we are looking at, but, yes, negotiations are ongoing.”
Arsenal's Shkodran Mustafi shows off his skills
Wenger is ready to offer Mustafi a four-year deal at the Emirates and values the 24-year-old at £25million.
However, The Mirror claim Valencia have quoted Arsenal a staggering £50m for their man.
Arsenal transfer chief Dick Law is reportedly in Spain for talks and their move could be boosted by Valencia’s need to sell to comply with Financial Fair Play regulations.
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“We're above the FFP guidelines, that's the reality, and as of today, the four players we've signed cannot be registered,” Valencia director of football Jesus Garcia Pitarch said.
“This means we need to reduce the cost in a significant manner to register the players and sign a centre-back, which is a priority in case one of the ones at our club leaves.”
Valencia kick off their La Liga campaign tonight (9pm) at home to Las Palmas and it will be intriguing to see if Mustafi features.
Wenger is also on the lookout for a striker but his move for top target Alexandre Lacazette looks destined to fail.
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Mustafi helped Germany to the semi-finals of Euro 2016
After scoring his fifth Ligue 1 goal in just two games in Lyon’s 2-0 win over Caen, Lacazette said: “From a personal standpoint, I will like to pass the threshold of 30 goals this season.
"There will be no departure. Everything is going well here at Lyon.”