Diagouraga joined Leeds United from Championship rivals Brentford in the January transfer window.
Scottish Championship outfit Rangers were interested in the 28-year-old midfielder, according to a report in The Scottish Sun earlier in January.
The Scottish Sun had also quoted Diagouraga as saying that he would be interested in working with former Brentford manager Mark Warburton at Rangers.
Johnstone, who played for Rangers in the 1970s and 1980s and is a club legend, believes that Gers boss Warburton did right not to over-pay for the former Watford prospect.
“Toumani Diagouraga went to Leeds United because he ended up being out of Rangers’ price range, and it was a no-brainer for him in terms of his wages,” the former Scotland international wrote in The Glasgow Evening Times.
“You might fancy a player but when a team from the Championship comes in for him and offers them double or treble their money, there is a big chance you will miss out. Rangers will not go above a certain level.
“Mark will only want players at the right price and he will work through a list until he gets the ones he feels are right. He will know he needs to bring in better quality for next season.”
Diagouraga made his debut for Leeds against his former club Brentford away from home at Griffin Park in the Championship last month.
The former Peterborough United midfielder played the final 31 minutes of the game and had a pass accuracy of 92%.
Leeds are 15th in the Championship table at the moment with 36 points from 29 matches.