Wenger believed his compatriot had a future in the back four but Coquelin's progress while on loan at Lorient - and his performances this season - have convinced him otherwise.
"He is more a player who likes to cover ground than a player who starts from the back in a tactical position," Wenger told Arsenal Player.
"He likes to be involved at the heart of things. A player's position has to suit his personality. When that is not the case, in the long-term you have no chance.
"I always thought he would be a player for Arsenal Football Club but he is a little bit in the situation of Jack Wilshere last year - the loan out to a top division club has done him good confidence-wise.
"He has transferred that into our first team now. He was good at the [Under-19] World Cup with France, and he is moving on well and improving."