The La Liga giants re-signed the 23-year-old winger from Everton during the last summer transfer window by triggering a €12m (£10.6m, $14.7m) buy-back clause agreed when the Spaniard was sold to the Toffees in 2015.
Deulofeu enjoyed ups and downs during his time at Goodison Park but the Catalans still decided to bring him back to the Nou Camp after he enjoyed a remarkable loan spell at AC Milan during the second half of last season.
The new Watford signing took advantage of Neymar's departure to Paris Saint-Germain to make Barcelona's starting line-up during the opening five games of the season.
However, he fell out of favour for Valverde since then and only made one appearance in his last two months at the club despite Ousmane Dembele being out due to injury.
On Monday [29 January] Barcelona decided to send him on loan to Watford with hope he could secure more regular time in the Premier League and even return to the Spain national team ahead of this summer's World Cup.
"I do not know [why Deulofeu has failed to established himself at Barcelona]. This are the circumstances. He came here with a lot of enthusiasm. We also [wanted him to do well]. He has had chances to prove himself but things have not gone as expected," Valverde explained in a press conference ahead of Copa del Rey the first leg of the Copa del Rey semi-final tie against Valencia.
"I talked to him about it and we thought that the best thing for him to go on loan [to Watford] to have more playing time given there will be World Cup at the end of the season. We, him and as, thought it was the best decision. But this does not mean that things will go wrong for him in the future as I'm happy with him on a personal level."
Deulofue became the fourth player to leave the Nou Camp this month following the previous departures of Arda Turan, Rafinha Alcantara and Javier Mascherano.
Aleix Vidal was expected to follow the same path before deadline day as the former Sevilla wing-back had also failed to establish himself at Barcelona since his arrival at the Nou Camp in 2015.
Sevilla and AS Roma were said to be interested in his signing with reports in Spain earlier this week claiming that the Serie A giant were ready to make a late move to secure his services.
However, Valverde has ruled out sanctioning his departure on deadline day after claiming that the versatile 28-year-old winger remains in his plans ahead of the second half of the season.
"There has been a lot of speculation regarding Aleix. It is true. He is a player who has been playing. He is not an indisputable starter title but he has been helping us regularly. He started in the previous [Copa del Rey] tie against Espanyol," Valverde said after confirming that Vidal is going nowhere.
"We have to consider that three players who play in a similar position like Arda, Deulofeu or Rafinha have left the club this month. So who It's good that he stays because we think he can help us."