Fleck, 17, was dropped to the reserves at the weekend, amid reports of a bust-up with assistant manager Ally McCoist.
Smith insisted the youngster was left out of the Emirates Cup squad for a different reason, and the club confirmed on Tuesday afternoon the manager had been "unhappy" with the player's attitude.
Fleck responded to being axed by scoring twice in the reserves' 6-1 win over Portadown and also played against Glentoran.
He was back in the first-team fold at Murray Park this morning and is set to play some part against City at Ibrox.
"He'll be back into our squad tomorrow," said Smith, who also confirmed Alan Gow was on the brink of completing a move to Plymouth following Charlie Adam's £500,000 switch to Blackpool.
"The fee has been agreed by the clubs and it's just up to the player to make his agreement with Plymouth, so we await the result of that."
Smith cut a resigned figure when asked if the sales of Gow and Adam - the latest in a series of departures from Ibrox this summer - would allow funds to be released for him to improve the squad.
"Not really," he said. "We have to bring in a level of money and that will help, obviously, go towards it but we're still some way short."
Despite the purse strings being tied tightly, Smith will continue to window shop in the hope of picking up a bargain.
He said: "Because the financial situation is dictating that we won't bring in many players, it doesn't mean to say we stop looking for them. I think that would be a dangerous thing to do."
Smith could be forgiven for gazing with envy at tomorrow's wealthy opponents, who are almost single-handedly defying the credit crunch in a bid to break into the Premier League top four.
The Rangers boss warned success may not be instantaneous and called for opposite number Mark Hughes to be given time to mould his stars into a unit.
"It's one of the interesting aspects of next season, just to see how they manage to put their team together," Smith said.
"I just hope Mark gets time to settle them into a team."
Wednesday's game is Rangers' penultimate pre-season friendly and Smith is pleased with the progress that has been made.
"I think we're beginning to get there," said Smith, whose side were beaten 3-0 by Arsenal on Sunday after winning 1-0 against Paris Saint-Germain 24 hours earlier.
"We had a couple of hard games at the weekend, which I think is necessary for us at this time of the year.
"We've got another one tomorrow night, so we've been progressing well.
"We've been getting a little bit sharper with each of the games we've played."