Hughes splashed out £9million to end Wright-Phillips' Chelsea frustration when he brought the 27-year-old back to City from Stamford Bridge in August.
Since then the fleet-footed winger has been one of City's outstanding performers and showed against Germany on Wednesday night that he could also be a key player in Fabio Capello's England squad in their bid for World Cup qualification.
Wright-Phillips gave the German defence a torrid night to help England win their Berlin friendly 2-1 and was only inches away from a fifth international goal with a shot which rattled the woodwork.
His performance came as no shock to Hughes but the City boss admits that he has been taken aback by Wright-Phillips' ability since he started the second phase of his City career.
Hughes said: "Shaun is playing exceptionally well at the moment and it doesn't surprise me that he had an impact on Wednesday night.
"The one thing that struck me since we were able to bring him back to the club is that he's actually a lot better player than even I thought he was.
"People don't really appreciate the quality he has until you actually seem it first hand in the way he applies himself and the effect that he can have on the game in a positive manner."
Wright-Phillips has been denied a head-to-head confrontation with England rival Theo Walcott when Arsenal visit City this weekend as the Arsenal youngster has been ruled out for three months following shoulder surgery.
The two are vying to fill England's highly sought-after right-sided midfield berth, along with David Bentley, Ashley Young and David Beckham, and Hughes believes his man is good enough to win the fight for Capello's affections.
Hughes added: "He has to keep playing as well as he has been doing this year but there's no reason why he can't continue with the current form he's producing because he's a very talented player.
"We are really pleased that people maybe once again are sitting up and taking notice of Shaun because he deserves it because of the quality of his play."
City face Arsenal after taking just one point from their last four Premier League games but should be strengthened by the return of captain Richard Dunne - provided there are no further complications over the impending arrival of his new child.
The defender has completed a one-match ban for his sending off against Tottenham a fortnight ago and played for the Republic of Ireland in Dublin last night following a quick detour back to Manchester to be with his pregnant wife.
Hughes said: "It's always difficult when your wife is expecting - difficult to focus - but he showed good professionalism once everything was settled back home, got himself back on the plane and made himself available for selection and all credit to him."
However, City will be without winger Martin Petrov after admitting defeat in their efforts to hasten the return of the Bulgaria international.
Petrov, who was injured playing for his country at the start of last month, has undergone surgery to repair damage to the meniscus in his left knee and will be out of action until the spring.
Hughes said: "We had hoped that we would be able to get Martin back a little bit sooner. Initially we had an opinion from a specialist that maybe if worked the site round the injury quite well we may be able to get away with an operation at the end of the year.
"That hasn't been the case unfortunately. There was an option to do a different type of operation but once the surgeon looked at the injury then it was felt it would be more appropriate to do a complete repair, that's why he's out for the three months."
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