The Uruguay midfielder didn't always see eye-to-eye with Arbeloa's predecessor Xabi Alonso this season.
But ahead of their weekend clash with Levante, Arbeloa stated: “The great thing about Fede is that he could also do well in goal. He's such a talented player that he could excel anywhere. The other day, I put him in his natural position. But I have a fantastic captain in him, and he's proven that in recent months.
"We'll see him in many positions because he can contribute so much. I like a team with a lot of movement, where players interchange positions. I'm sure Fede will really enjoy playing football, which is ultimately what I want.
"Fede embodies Real Madrid and is an exceptional representative of this badge.”
Arbeloa also insists Jude Bellingham, who has been below par this term, will be crucial to his plans.
He continued: “We’ve trained together for a couple of days, and you can see up close what kind of player he is. He has to be another leader on this team.
"I always like to have players who are very mobile, and Jude has the ability to create and build attacks. I’ll ask him to be a key player. He also has the ability to get into the box, and we have to take advantage of that.”
This morning, Arbeloa was also keen to highlight the efforts of Vinicius Junior in their midweek Copa del Rey defeat at Albacete. Arbeloa insists the Brazilian deserved to be praised on an awful night for the club.
He added, "It wasn't just his willingness, but also the performance he delivered. That's what I need from Vinicius. That's what it means to be a leader. I've also read a lot of criticism directed at the youth academy. You can be sure you'll have me on your side, because for me, Real Madrid's youth academy is the best in the world, and they'll always be there for me.”