The Gunners have long been credited with an interest in the Celta Vigo star.
The Spanish forward has continued his fine form from last season for Celta, and already has eight goals and five assists in 15 games in La Liga this season.
That kind of form has reportedly attracted interest from Arsenal, both of whom were reportedly keen on a move for the player.
The Gunners have long been rumoured to have an interest in the Spanish forward, with Mundo Deportivo claiming they were ready to make a £13million move in the January transfer window.
However, Balague has now rubbished that rumour, saying that Arsenal were never interested in Nolito.
“Arsenal have never been interested in Nolito,” he told Sky Sports. “Also Barcelona and Celta are negotiating a way to bring the forward to the Nou Camp. It could perhaps be a loan deal with players going to Celta, either Munir or Sandro.”
It does not come as any shock that Arsenal were not ever in the race for Nolito, with manager Arsene Wenger clearly happy with his current options.
The Gunners have Olivier Giroud in fine form up front this season; while Theo Walcott has also proven he can be effective as a striker when given the chance.
There is also Danny Welbeck to come back from injury and Wenger is sure to be hopeful that trio can do an effective job for him moving forward.